Lighter Evenings (Experiment) Bill [HL]

Lord Tanlaw: My Lords, I beg to move that this Bill be now read a second time.
	I thank the Government most sincerely for allowing me time to present this Bill, and I thank those Members who put their names down to speak on it. It is rather a daunting experience launching a Bill on one's own, and I could not have done it without the help of the Public Bill Office, Nick Besly, and my researcher Andrew Trotter. Thanks to all who responded to my survey. I sent it because I felt that as a Member of your Lordships' House, not having a constituency, I should do my best by circulating it to as many politicians as I could. I circulated it to 1,500 politicians, including all Members of this House, the place next door and the Members of the devolved Parliament and Assemblies.
	I shall just remind people, because it sometimes is confusing, what this Bill is all about. Primarily, it is to find out how to make the best use of the limited number of hours of daylight in winter. It creates a three-year experiment of single/double summer time—SDST as it is called—starting from 29 October this year. That means that there would be lighter evenings rather than lighter mornings during this period. When we advance the clocks at the weekend, we will experience the lighter afternoons and evenings proposed for the winter months of the experimental period. Noble Lords will appreciate that we will get some idea of it after this weekend. This time next year, on the last Sunday of March 2007, the clocks will be advanced one further hour to double British Summer Time. The time will then be in harmony with Central European Time. On the last Sunday in October 2007, the clocks will go back one hour, as will all the clocks in Europe, except in Portugal and the Irish Republic.
	Under the Bill, the devolved bodies can decide whether they want to participate in the experiment of single/double summer time. I have allowed for that so that the northern latitudes of the local electorates and the shortness of the winter days can be taken into consideration. On completion of the experiment, the government of the day should have collected enough data from all the interested parties, including the general public, to decide whether to continue with lighter evenings or to return to the present status quo of lighter mornings, which was agreed in 1972.
	There have been a number of Bills like this one, and I am nervous about wearying the House with yet another on the subject. It is the Road Safety Bill that has driven me to put this Bill before your Lordships. The Royal Society for the Prevention of Accidents—RoSPA—confirms the conclusion with the results of its 2002 survey, that this Bill, during the period of lighter evenings, will save at least 100 lives on the roads every year. No doubt the noble Baroness, Lady Billingham, and the noble Lord, Lord Faulkner, who are office-bearers in that association, will be able to confirm that more officially than I can.
	Nevertheless, a number of people have written to me and have appeared on talkback radio programmes. They are worried about the safety factor with a lighter morning school run, which they feel must be superior to a darker morning school run. However, the facts are clear, and were stated in a debate in the House of Commons on the British Time (Extra Daylight) Bill in 1996:
	"Only 18 per cent. of all accidents involving schoolchildren occur on the journey to or from school. Some 82 per cent. of accidents occur after school".—[Official Report, Commons, 19/1/96; col. 992.]
	That is an essential factor that we must remember throughout the debate. It is an unnecessary worry for those people who think that darker mornings are going to mean more accidents; statistics say otherwise.
	In addition to concerns over road safety, I have received submissions from many differing interests who advocate a change from the status quo of lighter mornings. They fall loosely under the heading, "quality of life", and range from walking the dog in daylight, to deterring early evening crime, to saving more than £1 billion a year through increased tourism, due to an extended season. Does the Minister who is to reply not agree that lighter evenings will also allow schoolchildren to boot a ball about before visiting the chip shop or slumping in front of the family television?
	British Association of Leisure Parks, Piers and Attractions (BALPPA) and similar bodies involved with leisure and sports pastimes have said that they would strongly support the experiment proposed in the Bill. In my view, there is a good possibility that the adoption of SDST for an experimental period will save energy and make a positive contribution to the carbon emissions equation. On 26 January, the Minister for Science and Technology in the debate of my noble friend Lord Montgomery of Alamein disagreed and quoted the Building Research Establishment's absurd and unproven assertion that energy use would increase under SDST due to,
	"people leaving lights on all day".—[Official Report, 26/1/06; col. 1384.]
	My wife says that I am always leaving the bathroom lights on, but I do not think that all of the people will leave all of the lights on all day to the extent that it would not save energy.
	Let us not forget that the father of daylight saving was Benjamin Franklin. He calculated in 1784 that Parisians burned 127 million candles unnecessarily every year, because they did not change their clocks. He proposed a form of daylight saving for that city and suggested that there should be a tax,
	"on every window with shutters to keep out the light of the early morning sun".
	Is the Minister aware also that in 1909, William Willett, who was the great-great grandfather of the popular singer Chris Martin of Coldplay, drafted Bills for Parliament's acceptance proposing daylight saving in this country as a means of conserving energy? He did not succeed, but Daylight Saving Time was adopted in the Summer Time Act 1916—a year after his death. That Act was designed principally to save coal during the First World War and was followed by the Summer Time Act 1925.
	The Policy Studies Institute's Making the most of daylight hours was put forward by the noble Baroness, Lady Thatcher, when she was Prime Minister. She was convinced that it could lead to great energy savings. Former Prime Minister Edward Heath introduced the Summer Time Act 1972, which was well intended, but seriously mistaken, but gave us today's status quo.
	I do not know what noble Lords opposite believe, but they are keen on "green" matters these days, so perhaps they would look at this Bill with a view to incorporating its proposals in a future manifesto. Why did the Minister of Science of Technology not mention during my noble friend's debate the California Energy Commission's detailed study of the effects of daylight saving on electricity use? Is he not aware that the commission concluded that there would be savings of,
	"hundreds of millions of dollars because it would shift electricity use to low demand, (cheaper) morning hours and decrease electricity use during the higher demand hours"?
	If that applies in California—and it is a detailed study which I commend the Minister to read—is there any good reason why the same kind of savings cannot be made here, especially as there is not the same demand for air conditioning during the summer?
	The application of SDST in this country would have the added bonus of harmonising with Central European Time (CET). I would have thought that the proposed experiment would benefit the travel and communication industries as well as the City of London. Yet again, the Minister seemed to disagree with that concept in his statement at the close of my noble friend's debate.
	It has been suggested to me in a number of letters received regarding the Bill that there could be problems with rescheduling planes and trains to adapt to the new timings during the experimental period. Initially, yes, of course, there would be; but once in place there would surely be less rescheduling if our clocks and travel schedules were in harmony with those in Europe—which they are not at present. There is also the added benefit that the present early morning flights over London and into Heathrow as early as 4.30 am would switch to arriving at 5.30 am under single/double time schedules. Surely no one could object to that.
	While I appreciate that in general there could be strong support for lighter evenings, as indeed there is for lighter mornings, it should be remembered that the Bill will prove effectively one way or the other which is the best, by actual experience of single/double summer time. The experiment proposed in the Bill should provide enough data for the Government to decide which is best for the quality of life for the local population in different parts of the country and what effect it has on the overall demands on electricity throughout the year.
	A Bill of this kind is bound to raise the tiresome West Lothian question. I have therefore split up the plan so that the devolved governments have a choice. What will the Westminster Members of those devolved areas—Scotland, Wales and Northern Ireland—do? A briefing note that I sent to noble Lords showed how population distribution related to latitude in the United Kingdom and how that would be affected by the lighter evenings experiment. One should note that Westminster MPs who represent English constituencies and 84 per cent of the population will have only one chance, if your Lordships allow this Bill to pass to the other place, to ensure that the Bill reaches the statute book; whereas Westminster MPs with Scottish constituencies, who represent less than 9 per cent of the population, can seriously affect the English vote unless they abstain. That point has been raised time and again concerning other Bills. They have no right to vote on a matter that denies their constituents the choice that they may have at home.
	I took part in a radio discussion with a Scottish nationalist MP who made it clear to me that the Scottish nationalists would be very happy under my Bill to carry on with the status quo and not adapt to single/double summer time. That is a legitimate political position. The only thing that they need to check is that the people of Scotland who elected them actually want that. I am not so sure, but perhaps I am not in as good a position to judge as they are. So there is no problem with the Scottish National Party, which would be happy with a change of time at the Border.
	It has been difficult for the Secretary of State for Northern Ireland to have contact with Northern Ireland MPs. That problem must be resolved, because it is difficult to get feedback. Therefore, I will only surmise that if the people of Northern Ireland accepted my Bill and accepted single/double summer time, the Republic of Ireland might reconsider its position about keeping Western European Time. It should be looked at carefully. As I said, those areas would have a choice, as would Welsh MPs, although, latitudinally, the matter is not so important to them.
	Someone is always bound to raise the question of Portugal. How has that country managed to remain in Western European Time as a good example of not falling in line with Central European Time? Let us not forget that Portugal did not do that to save daylight. Lisbon is at latitude 37 degrees north and its citizens enjoy at least 10.5 hours of brilliant daylight during the Christmas period, so they do not need daylight saving. I believe the reason Portugal stays in Western European Time has something to do with working hours but nothing to do with daylight saving.
	Portugal has a long border with Spain. More than a million people every year cross that border. They have no problems with altering their watches, and it does not appear to affect the economy or tourism. People all over the world are quite used to changing their watches, as we do as soon as we get on to a plane, so I do not think that that is a problem. To people who promulgate Portugal, I say, "What about Gibraltar?". If anywhere should be on Western European Time in harmony with a mother country, it should be Gibraltar, but it is not. I wonder why.
	I return to the survey, the results of which I promised to give. I mentioned how many people were covered by the survey, but the returns indicate a clear majority in support of the experiment proposed under the Bill. That is a different result from the one given by the noble Lord, Lord Sainsbury. He seemed to give the impression that the country does not wish to change, but he has not given any statistics for that conclusion and I should be most interested to know on what basis he makes that very broad statement.
	The returns of my survey reflect the results of a similar MORI poll, which was instigated by the Mayor of London last year and was conducted simultaneously in London and Scotland. I have the facts here, but where is the Minister getting his facts from? I have been preparing for this Bill for two months since its First Reading, and I am not getting a massive "no" from any part of the country. As a matter of interest, of the Peers who responded, 74 per cent agreed with the proposed experiment, only 20 per cent disagreed and 6 per cent were not sure. Sixty-two per cent of the MPs to whom I wrote agreed with the proposed experiment, 24 per cent disagreed and 14 per cent were not sure. I shall not trouble noble Lords with endless statistics but, of the whole lot, including the devolved Assemblymen and so on, 60 per cent were in agreement with the experiment proposed under the Bill, 33 per cent disagreed and 7 per cent were not sure.
	Statistics are malleable but, from the Mayor's MORI poll and from the simple poll that I conducted using a reputable outside agency at my own cost, there was no overwhelming view that people do not want to change from the status quo. One of us is wrong, so the Minister must come up with statistics or something to shore up his view that the majority in this country is against any form of change. We all know that the party managers are against change, but they do not represent the country. I hope that the time has come when politicians and party managers will not be listened to on this issue, which affects everyone's quality of life. Either I have this terribly wrong or the Government have, and the point of my Bill is to find out what happens when we switch to single/double summer time.
	I shall take what the Minister said bit by bit. He mentioned that traditionally there has been slight resistance to a change from the hill farming community, mainly in Scotland. I have been the proprietor of a hill farm since 1965 and have found that that is not true. Can the Minister specify how hill farmers will be adversely affected by single/double summer time, bearing in mind that the feeding of all farm animals is dependent on their circadian rhythm of night and day and not on the chimes of Big Ben?
	I remember that in 1968 the forestry and building workers did indeed have to wait for the sun to rise, and they sat around in vans reading papers until things got going. But, today, the timber extractors use floodlights in the early morning and at night to get the job done. I speak from the experience of my own declared interests in the civil engineering and railway engineering industries, where my people undertake work in the dark while most people are asleep in their beds. It is often difficult and dangerous work involving high voltages and the constant passage of high-speed traffic; nevertheless, darkness is not a problem. Floodlights, proper equipment and reflective clothing have made it a very minor problem.
	I find it incredible that the Minister is using postmen and milkmen as examples of people who would be affected by dark mornings. When did the Minister last hear the sound of his mail plopping on to the doormat before the sun had risen? We are getting single deliveries these days, and it seems to me that the mail often arrives long after the sun has risen over the yard-arm rather than over the horizon. When did the noble Lord last hear the clatter of milk bottles on the doorstep with the unmistakable whine of the departing milk float? I am sure he would be the first to agree that the supermarkets brought about the demise of milkmen, so why does he think that milkmen will be affected by my Bill in their retirement?
	To start enjoying the lighter evenings of summer time, we happily advance our clocks by one hour. But what will happen in autumn if we have to turn them back again because the Government stop the Lighter Evenings (Experiment) Bill from reaching the statute book? All of us who are part of the political spectrum will be indirectly responsible for at least 100 unnecessary road deaths next year, just as we have been every year since the lighter evenings experiment was terminated in 1972 by the House of Commons.
	I hope that the Bill will proceed from this House to the other place, where lighter evenings can be reconsidered on the results of the experiment and then legislated as the new status quo. If the Government are not prepared to look upon an experiment intended to improve the quality of life for all of us, they must give a reason which everyone can understand and pass judgment on at the next general election. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord Tanlaw.)

Baroness Billingham: My Lords, it falls to me to give my sincere thanks to the noble Lord, Lord Tanlaw, for the outstanding work that he has already done on the Bill and for the way in which he has laid out before us today the issues that we have to address both here in this Chamber and further afield. This is my first opportunity to speak on the issue. It has not come before Parliament since I have been in the House, but I could not be more enthusiastic about any Bill to come before Parliament during my time here. I am certain that the proposals before us today are absolutely and totally right, so let me, so to speak, put my cards on the table here and now.
	We have the opportunity to do two enormously important things: we could lift the morale of the entire nation, probably avoiding the debilitating condition of mental depression for thousands of people; and we could help to create a healthier, more active lifestyle, for children and adults, which will combat the national scourge of obesity. And what is to stop us? Myths and prejudice—the twin scoundrels which threaten to hold a nation to ransom.
	I shall put my case simply. At a point in the calendar—the autumn—when clocks are about to be turned back, we all have the rueful regret that summer has passed, autumn is here and winter is round the corner. The days are shorter and nights are longer. And just as we enter this naturally low period in our national morale, what do we do? We turn the clock back a whole hour and turn a naturally unhappy syndrome into a disaster.
	This self-inflicted pain affects thousands of people with varying degrees of depression and condemns us to five months of unnaturally deepened gloom. It also robs our children—in my case, my grandchildren—of the priceless, post-school day opportunity of charging around the park, sliding down the slide, kicking or hitting a ball and, in general, letting off steam. From October onwards, we invite—no, we force—them into a sedentary state—couch potatoes, or whatever. But we are responsible and, frankly, it is unforgivable. All that comes at a time when doctors and health experts have at last convinced us that we are in danger of becoming a clinically obese nation and that the antidote is a better diet linked to more exercise. To what other national health epidemic do we have such a simple remedy?
	What can possibly stop us from doing the blindingly obvious? The answer is our two foes, myth and prejudice. Let me start with the myths. Myth one: we tried it before in the 1960s and it did not work then, so it follows that it will not work now. That, I suspect, is the platform that the Minister is going to try to use to dissuade us today. He will go through the process that failed and tell us that there are no arguments to counter them. Frankly, that is nonsense.
	In the 1960s, children's exercise during the school day was at least twice the level that it is today. Children walked to and from school, or at worst from the bus. They had at least three hours of PE in both primary and secondary schools. I well remember my own children in the local comprehensive school having a lunch break of one and a half hours to allow them time for hockey practice, netball practice, gym club, badminton—the list was endless. Then after school there were midweek matches and, yes—wait for it—Saturday morning matches against other schools every weekend of the year. Compare and contrast, Minister, if you dare.
	The exercise diets of now and the 1960s could not possibly be more different, nor could the food diet. My mum cooked Brussels sprouts every Sunday, not for several minutes, but for several hours. She reduced them to a pulp, and in the process steamed up every window in our distinctly uncentrally heated council house. The aroma lingered on for days. I am sure she never enjoyed the nation's favourite food of today, chicken tikka masala, or had any concept of convenience food. So contrast that, too, Minister, and ponder on the other threat to our health of meals off the shelf, even if they come from Sainsbury's and assure us that we are being good to ourselves—hence the statistics for today's generation and hence the urgency for us to make a change.
	Myth two: the Scots will not let it happen. It is obviously darker further north, but the argument has always focused on Scottish farmers. Do farmers have such a controlling influence north of the Border or is the entire Scottish economy at risk if we ask Scottish crofters to suffer extra morning darkness while bringing in their Highland cattle or, indeed, in reality are Scottish farmers or non-farmers any different in their aspirations from those of us south of the Border? Obviously not.
	There are two key factors that I wish to put forward about the Scots. First, they produce highly talented sportsmen and women, from Eric Liddell to Liz McColgan and Andy Murray. Their talent is phenomenal. The Scots care about sport. Could they, would they, resist the proposal before us today if it meant more time for their children to develop their sporting talent? Even Scottish farmers have totally different lifestyles from that of their parents in the 1960s. The old arguments just will not hold.
	The Scots have another reason to welcome the Bill. Tragically, they have one of the worst health records in Europe. In parts of Glasgow, the male life expectancy is only 58 years—what a tragic waste. That is mostly due to poor diet and lack of exercise. People in Scotland are acutely aware of the problem and are striving to overcome it. Our Bill will help and support them not only to produce more sporting heroes, but also to live a better and longer life where the balance has been restored.
	Myth three: children will be killed in the dark on their way to school. That is not true. I leave that point to my excellent colleagues on the Benches beside me to dispel, as I know they will.
	Myth four: it will be damaging to the economy—airline and train schedules, as have already been mentioned, will have to be redrawn, and nobody wants it. That is just not true. Today, colleagues will talk about the advantages of moving to Central European Time and make the business case for coming into step with our major trading partners. From first-hand experience as an MEP, I know the frustration and difficulty of trying to work with constituents and others when we seem to be acting in a parallel universe.
	No, the arguments are fragile, but much more worrying is the underlying prejudice, the avoidance—as some may see it—of further harmonisation and integration with central Europe and our European partners with whom we can make a better future. Could it be possible that a political party would sacrifice the health and well-being of our citizens on such a negative premise?
	Myth five: what about our milkmen and postmen? My milkman, who still delivers to my door, is up at 3 am every morning. He tells me that the dark, empty streets are his best ally in allowing him to do his round quickly. As for my postman, he parks his car at the end of the road and I am happy to have my letters through my door by 9.30. How things have changed, yet again, from the 1960s. Postmen and milkmen are also family people. Their children's needs are just the same as everyone else's. Are they really likely to allow their particular work style to dictate everyone else's? I think not.
	So, Minister, make my day, and not only mine but everyone else's in Britain. Stand up and say, "I am completely persuaded by the value of the Bill. I will urge the Government and all Cabinet Ministers to look at the proposal favourably, to demonstrate joined-up government and to say, 'We are the future, not the past'". Challenge every MP in every constituency to ask their constituents what they think. I know the answer; the answer is yes. Let us give this Bill our fullest support and ensure that it becomes reality at the earliest possible opportunity. I look forward to the Minister's reply.

Lord Laing of Dunphail: My Lords, I support the Bill from a personal point of view, believing that many thousands of others would take the same view. For 45 years of my life, I left home every morning at 6.30, arriving home after dark, when the hour went back—biscuit manufacturers have to work very hard. I never saw my garden in daylight, except at weekends, and I used to long for the clocks to remain on British Summer Time. So did my dogs.
	When the clocks go back, it seems to me that there is a moment of depression, with the long winter nights stretching endlessly ahead. Keeping summer time throughout the year and double summer time for its period, would, I believe, be carried by a very large majority if the question were ever put to a referendum. Of course, I am not suggesting a referendum; I am only suggesting what the result would be.
	Lighter evenings can be put to so much better use than lighter mornings. They might also encourage our youth to be outside instead of endlessly watching television. One of the Government's stated aims is to be at the heart of Europe. Then let us keep the same time as Europe. Business meetings in Europe could be so much more easily arranged.
	With regard to children going to school in the dark, most are now either bussed or taken in 4x4s—even after the Budget. Figures suggest that keeping summer time throughout the year would save lives. What is being put forward is only a trial and, in my view, the country should take this step. If it were to prove unpopular with the majority, which I doubt, the country could return to the status quo with no harm done.

Viscount Montgomery of Alamein: My Lords, it is a great pleasure to follow the noble Lord, Lord Laing, and the noble Baroness, Lady Billingham. Their speeches—one comprehensive and one brief—were to the point. I agree with both of them. So far, so good—three up and several more to play.
	In his reply to my Unstarred Question on Central European Time in January, the noble Lord, Lord Sainsbury, said that revisiting this issue was like flogging a dead horse. This horse is not dead; it is very much alive and well and in a very good state of training, as has been demonstrated so far. The Bill introduced so comprehensively by my noble friend Lord Tanlaw is more than adequate proof of this and has my wholehearted support. There is no need for me to rehearse too many arguments on this matter, because I made them in January and during a number of speeches in the 1990s.
	However, what is proposed today is a new and quite excellent idea—to have an experimental period. The fact is that circumstances since 1968, as have already been pointed out, have changed radically; lifestyles are different, we are all doing different things and we are much more involved with trade overseas, particularly in Europe, where we do 60 per cent of our trade, as the noble Lord, Lord Sainsbury, knows very well. So we have quite a different situation: we have moved on. There is no doubt that this Bill has considerable support. What is being suggested is the right way to go forward, and I hope the Government will take it seriously.
	I have a feeling that this debate will go on longer than originally anticipated, so, before I sit down, I should give an explanation, because I may not be able to stay until the very end. We are currently enjoying a visit from the president of the Dominican Republic. This is an official visit—indeed, we were the first country to recognise that country when it gained independence over 160 years ago—and the first visit by the president of that country. As noble Lords know, I am heavily involved with Latin America, of which this is a member country. Therefore, I must go to lunch with the president on his last day here. I mean no discourtesy to my noble friend Lord Tanlaw or, particularly, to the noble Lord, Lord Sainsbury, from whom I know we will continue to hear a good deal on this subject. I very much hope that this Bill will receive a brief passage through this House and be acclaimed wholeheartedly in the House of Commons. An experiment is an experiment. That is just what we need to do. We have moved on in 40 years, and it is time to try it again.

Lord Faulkner of Worcester: My Lords, following the noble Viscount's sporting analogy, I am very happy to bring the score up to 5-0 in support of the Bill of the noble Lord, Lord Tanlaw. I join others in congratulating him not only on introducing it today, but on his perseverance on the issue over so many years. It is evident that he has a great deal of support in this House and, I think, in the other place. I hope that when my noble friend replies for the Government, he will take note of the support that the measure has.
	The noble Lord's timing is absolutely impeccable in getting the Second Reading today with the clocks going forward this weekend. No Member so far in this debate has drawn attention to the fact that this is a very auspicious day for those who are interested in clocks and time-keeping. This morning, His Royal Highness the Duke of Edinburgh is unveiling a memorial in Westminster Abbey to John Harrison, who spent half his creative life inventing the perfect timepiece, accurate to one second a month; he then spent the next 10 years of his life persuading the Board of Longitude to pay him the prize money they promised they would pay him when he invented it. I hope the noble Lord Tanlaw will not have to wait 10 years to get his reward.
	It is well known in this House that I have a deep affection for and interest in the railways in this country, which I regard entirely as a force for good. I would like to put it on record that it was the railway system in the Victorian age which brought about standard time in the United Kingdom. The Great Western Railway was the first to realise that it could not run a timetable if the time in Bristol was different from the time in London. It adopted a common timetable in November 1840. Other railways followed suit and, by 1847, virtually all were using London time. Indeed, by 1855, the vast majority of public clocks were set to GMT, though some, like the great clock on Tom Tower, which may be familiar to your Lordships who know about Christ Church in Oxford, was fitted with two minute hands, one showing GMT and the other the local time. It may not surprise noble Lords to know that the lawyers were the last group to hold out on standard time. They stubbornly stuck to local time through to 1880. Indeed, you had the extraordinary position where polls in some parts of the country were opening at eight o'clock and closing at four o'clock, while in other parts they were opening at 8.13 and closing at 4.13.
	Let us get back to the Bill. It is widely known that this issue divides government departments. If it were being debated purely as a road safety measure and was the responsibility of the Department for Transport, it would get a very fair wind. But the Department of Trade and Industry is in charge of time and we know from quite long experience now that it is—shall we say?—a little less enthusiastic about the change to double summer time. Nevertheless, I hope that my noble friend Lord Sainsbury of Turville can offer some comfort to the noble Lord, Lord Tanlaw, and tell the House that the Government are prepared, at least, to offer a fresh review of the issue.
	The most recent report on the effects of adopting summer time in winter was published by the Transport Research Laboratory back in October 1998, eight years ago. It concluded that if the UK adopted single/double summer time—that is, GMT plus one hour in the winter and GMT plus two hours in the summer—400 fewer people would be killed or seriously injured on our roads. The figures published recently by RoSPA—I declare an interest as a former president of that organisation—and by the Parliamentary Advisory Council for Transport Safety show that the number of casualties would fall by around 450; that includes between 104 and 138 fewer deaths on the road. The reduction in road accidents affecting schoolchildren is likely to be particularly marked, as over four-fifths of accidents occur after school, when children and, indeed, drivers are likely to be more tired and less alert than they are in the morning. So, an extra hour's daylight at the end of the day after the schools come out is likely to be very beneficial from the road safety point of view.
	I do not know whether the Government accept those figures. I am pretty sure that the Department for Transport does. But whether or not they do, surely it is time that we had another experiment of the sort proposed in the Bill, accompanied by new authoritative research showing what the effect on road casualties would be from the change.
	What the noble Lord, Lord Tanlaw, is proposing is extremely moderate. He is not suggesting that we change irrevocably to double summer time, with no opportunity to switch back; he is proposing a three-year experiment. Neither is he suggesting that Scotland and Northern Ireland, or Wales for that matter, will be dragged, kicking and screaming into adopting these proposals for lighter evenings. Instead, his Bill gives the devolved administrations in those parts of the United Kingdom an opportunity to opt out, if they wish. This is a novel approach to the issue, and I congratulate the noble Lord, Lord Tanlaw, on thinking of it.
	I hope that the whole of the United Kingdom will agree that the proposal makes sense, because I do not think, any more than does the noble Lord, Lord Laing, or other speakers, that the arguments about early morning workers in Scotland, in particular—farmers, those delivering milk, postal workers and so on—are anything like as strong as they may have been in the past, or that the reality is as strong as the prejudiced seem to think that it might be. But, in any event, the Bill of the noble Lord, Lord Tanlaw, gives Scotland the right to choose. That seems to me to be a very sensible compromise.
	Certainly, when we look at this issue from a business and commercial viewpoint, it is self-evident that we in England do business with many more people in continental Europe than in Scotland. There is strong support for this change for people involved in sport, leisure and tourism, as my noble friend Lady Billingham pointed out. But, for me, the most compelling argument is road safety. We have a good road safety record in this country—a lot better than many others in the world—but we could do better. I am convinced that changing to lighter evenings would make a real difference, particularly in respect of road casualties.

Lord Monson: My Lords, the score is about to change to 5:1. I must congratulate my noble friend Lord Tanlaw on the hard work that he has obviously put into preparing this Bill and drumming up support for it, on his presentation today and, above all, on his mastery of the art of spinning. What could be more seductive than the notion of lighter evenings, with nary a hint of any corresponding downside? That is so much more appealing than, for example, a Central European Time Bill, as even absolute dunces at geography are dimly aware that the United Kingdom is not remotely located in central Europe.
	I must also congratulate my noble friend on his pre-emptive strike at the prospective objections from what we term, albeit not entirely accurately, the Celtic fringe. The noble Lord, Lord Faulkner, also mentioned that. Of course, there is no valid reason why there should not be different time zones within a single country. Many countries already have between two and 11 time zones, and not just those running from east to west. The distance from Sydney to Brisbane is almost exactly the same as that from London to Inverness. Queensland, being nearer the equator, never switches to summer time; in contrast, New South Wales does, so, for about half the year, those travelling from Sydney to Brisbane or vice versa have to alter their watches. For the remaining six months, they do not. The Australians take that in their stride, as they are quite used to altering watches when travelling from east to west or vice versa.
	What are the main reasons for sticking with the status quo? First, and most obviously, we are not remotely in central Europe. It is objectively ridiculous for London—still more so Cardiff or Belfast—to be in the same time zone as Warsaw. Today, for example, 24 March, the sun will have risen in Warsaw one hour and 49 minutes before it rose in Belfast and one hour and 23 minutes before it rose in London. Yes, Spain is on Central European Time. I am very fond of that country, but Spain is an odd place in one respect. It is unique in Europe—perhaps in the world—in that people have their lunch and dinner two or three hours later than anywhere else. Indeed, Eastern European Time would suit them even better.
	I could not speak against my noble friend Lord Montgomery's Motion because I was on my way to Bombay at the time, but we were told how terribly tough life is for London businessmen travelling to Paris. They face no greater hardship than their counterparts who have to travel from Lisbon to Madrid, from Stockholm to Helsinki, from Rome to Athens, from Chicago to Detroit, from LA to Phoenix or Denver or from Adelaide to Melbourne—although I think that the time difference there is only half an hour. None of them seems to make a fuss.
	We are then told, as several noble Lords have told us today, that children are put at risk by dark evenings in winter months—dark mornings apparently present no problem. However, Birmingham and Berlin are on the same latitude and are 15 degrees of longitude apart, so the sun rises and sets at a virtually identical hour, local time, in each city. Yet the methodical, pragmatic and scientifically rigorous Germans have concluded that there is no need to switch to Eastern European Time to protect their children.
	Finally, the noble Lord, Lord Tanlaw, among others, asserts that we ought to be in the same time zone as all other EU countries. That is literally impossible. At present, 12 per cent of EU countries are on Western European Time; 24 per cent on Eastern European Time; and only 64 per cent on Central European Time. The latter proportion will fall to below 60 per cent if and when Romania and Bulgaria join the EU.
	The noble Lord argues that we need an experiment. As is well known, an experiment took place between 1968 and 1971 and was finally rejected. It is claimed that life has changed since then but, much more recently, the Portuguese dabbled with switching to Central European Time but swiftly rejected it after a trial period—not for the reasons that the noble Lord suggested.

Lord Tanlaw: My Lords, I thank the noble Lord for giving way. The Bill is about daylight saving and maximising the use of daylight. It is not really about time zones; as far as I am concerned, that is a happy coincidence. We are talking about latitude here, not longitude. It would be helpful if the noble Lord remembered that.

Lord Monson: Indeed, my Lords, I take the noble Lord's point. I shall come to that.
	Is there any scope for moving to some degree towards the state of affairs to which the noble Lord, Lord Tanlaw, the noble Baroness, Lady Billingham, and others aspire? I think that there is. We can surely all agree that a switch to Central European Time would benefit almost no one in the months of December and January, when most people would still finish work after dark and it is too cold for most non-professional outdoor sports. Lighter evenings would be beneficial in November and the first three weeks of March. Would it not therefore be an excellent idea to try to secure agreement that summer time, being the equivalent of Benjamin Franklin's excellent Daylight Saving Time, should start not later than the second Sunday in March, or possibly earlier, and finish on the first or second Sunday in November—ideally, in conjunction with neighbouring countries, for the sake of simplifying airline schedules?
	Obviously, such agreement could not be achieved overnight—it might take two or three years to secure—but other steps could be implemented much more rapidly. It is clear that Britons tend to start and finish work much later than our continental cousins. I have read that in Norway many offices work from 7 am to 2 pm with only a very short break of 20 or 30 minutes for lunch, so that workers can get out into the open air at two o'clock—on to nearby ski slopes in winter or into their boats or on to hiking trials in summer. If those factories and offices that do not already permit flexi-time were to do so, or to agree to start and finish work an hour earlier than they do at present, with schools following suit and shops subsequently obliged to do so for commercial reasons, there would be much greater scope for people to get out after work on to those playing fields that have not already been sold off. That would not require legislation. Even altering school hours would not require legislation from Westminster. Speaking of schools, I seem distantly to remember schools having different timetables in summer and winter. As the noble Lord, Lord Tanlaw, was at the same educational establishment as me and may well have a better memory, he can probably confirm that.
	Let us first explore the voluntary, non-legislative avenue of starting work a bit earlier and, of course, finishing earlier, rather than starting to pretend that Britain is located in Mitteleuropa.

Lord Quinton: My Lords, first, I congratulate the noble Lord, Lord Tanlaw, on his excellent proposal. I am delighted to think about it and I am sure that many others are as well. A point that I think no one has mentioned so far is that, unlike nearly all proposals put before your Lordships' House, its financial cost is practically nil and its benefits are very obvious.
	Of course, that is not to say that there are no costs. Being very old, I can remember endless discussion through the latter part of so-called modern history of daylight saving proposals of one sort or another. As several noble Lords have suggested today, they always come to grief on the well known phenomenon of Scottish shepherds. Surely the thing about Scottish shepherds is that there are not very many of them. It is obviously undesirable to sacrifice a small number for a few, but it is probably digestible, provided that the sacrifice is not very great and the benefit to the many is very considerable. In fact, that does not matter because there is no need for them to suffer. The plain fact of the matter is that the service of breakfast to sheep, or whatever the shepherds are getting up for, is not really governed by the clock, as someone pointed out. They will not kick up a fuss if it is not provided at 8 o'clock; they will be quite happy so long as it is provided at 10. This presents the shepherds with a problem; what will they do in the earlier hours before they deliver the sheep's breakfast? Scotsmen with severe Calvinistic consciences will probably not want simply to lie in bed, as I would in their situation; they will get up and do something such as privately distil malt whisky, fabricate bagpipes or perform other ancient Scottish crafts. There is no reason for them to suffer at all. If anything, it is simply a slight switching of their energies from one direction to another. There is no question of any particular group of human beings bearing the cost of this benevolent proposal, which will benefit many people enormously.
	We have heard some very interesting remarks about road safety, which have been made with the benefit of knowledge of statistics—something I am in no position to offer. I thought they were quite impressive, but I felt that one more question needed to be asked—it may have been asked already; perhaps I did not register it: as well as comparing the number of accidents that children have going to school with the number of accidents they have coming back from it, in what degree of darkness do those accidents happen? At any rate, it barely seems to need to be statistically demonstrated that various sorts of monsters, to whose attentions children are exposed, particularly when they are out and about in the dark, are more likely to operate in the evening than in the morning. The morning rapist is a fairly rare bird, so far as I know, but they become increasingly common from drinking time onwards in the evening.
	The same is true of the drug-fuelled youth driving a stolen car, who crashes into children walking from school. These monstrous dangers to children, as opposed to the ordinary and sad wear and tear of ordinary road accidents, would be very responsive to the proposed change in legislation. Such a change would ensure that children are out and about in a properly lit environment when they are not in the immediate vicinity of their homes or under supervision, so I very much hope that people will bear in mind the superb economy and magnificent benefits of the suggestion of the noble Lord, Lord Tanlaw.

Baroness Greengross: My Lords, I, too, support the Bill. I have been involved in the campaign for extra daylight hours since the late 1980s when I was chief executive of Age Concern, which was vigorously involved in the campaign. Having also worked in industry across Europe and run a pan-European NGO, I am aware that bringing us into line with most of the EU would help communications and business significantly. Moreover, to have an extra hour of useable time in the evening would do a great deal to promote healthy living, which is very much on the Government's agenda, as well as outdoor pursuits and activities for people of all ages. It also has huge potential for increasing tourism. It would also help to enable more flexible working practices and work/life balance initiatives to take hold. As we heard from the noble Lord, Lord Quinton, if the Bill is adopted, there will be fewer accidents, including non-motor ones, as the result of tiredness and darkness, as well as a reduction in the number of alcohol and drug-related accidents and crime. We know that people drink more in the evenings.
	Many old people, and some young women, feel unable to go out on dark evenings. They do not venture out at all, even though statistically they are less likely to be attacked than young men. We are not sure whether that is because they do not go out or because they are less vulnerable, but it would be nice if they had equal opportunities to lead a full, better quality life as younger people do. The adoption of the Bill would immensely benefit the great majority of people in this country. There are objections from northern Scotland, but it is not impossible to have a different time zone or come to an agreement, as have Spain, Portugal and Gibraltar. I therefore hope that, having listened to the arguments, the Minister will be convinced of the huge value of this experiment to the very great majority of us in this country.

Baroness Trumpington: My Lords, it has always been my understanding that the contribution of the speaker in the gap has to be in the form of a question. So although I express my support for the Bill, can the Minister reassure me that no section of British industry would suffer if the Bill became law?

Lord Addington: My Lords, I have listened to various speakers, but do not think that anyone has grabbed hold of the fundamental fact that there is only so much daylight. We are therefore talking simply about the management of daylight and patterns of behaviour—how we want to use what is available and what changes we are prepared to make to get benefits from it. Nor has anyone hit on the fact that the further north you go in the winter, the fewer hours of daylight there are, and that Aberdeen, where I spent several years, will not have the benefits enjoyed in London. The fact is that there is not as much light there, whether one plays around with the hours forwards, backwards or sideways. The same is also true the other way round. I suggest to the noble Baroness, Lady Billingham, that having floodlights on a tennis court in the north-east of Scotland is a waste of time because one could probably play tennis there by natural light at 10 o'clock at night anyway. The light there is very good. So there are winners and losers as we play around with the system.
	One of the problems with the Bill is that it suggests that there would be different time zones north and south of the Scottish border and east and west of the Welsh border, which would create an immense amount of trouble for small groups of people who cross those borders every day. That is probably the greatest flaw in the Bill. Moreover, let us face it; the noble Lord is trying to square a circle. There are pros and cons. Which bits will benefit the greatest number of people? Is the inconvenience to small numbers of people minor?

Lord Tanlaw: My Lords, the noble Lord is right in a way, but I really do not see a problem. Far fewer people cross the border north and south between England and Scotland than cross the Channel. These days, it is not really a problem for businessmen and tourists to have to twist their watches one way or the other. The noble Lord must be more precise and cite an actual business problem similar to the one we have in Europe at the moment simply by having a time difference of an hour.

Lord Addington: My Lords, of course the noble Lord is right; I said that this was a question of management and convenience. People in the United Kingdom cross the border more casually and for a shorter time compared with people who face checks when they cross the Channel, so there would be a slight change there.
	I argue that there is no great and wonderful answer. I actually think that we are arguing on the margin. There are minor benefits here and there, backwards and forwards. Lighter evenings become more intense at some times of the year and less intense at others. Coming out of a long, gloomy and, for us, surprisingly cold and dark winter, lighter evenings may seem more attractive than they might have done if we had a mild winter. I suggest simply that the benefits could be wonderful, but they would always be on the margin, and they would change depending on which part of the United Kingdom you are in.
	This debate has gone on a long time. The road safety argument, followed by the leisure time argument, probably has the greatest force; but those arguments change as the amount of daylight up and down the country changes. If the Minister knows a way in which we can address this matter more coherently, I should be interested to hear it. However, we are talking about changing matters of behaviour and how we address those who lose out. Does the inconvenience of a change justify the benefits?
	On the day-to-day convenience of travelling across an internal border, I live in Berkshire and buy my milk in Wiltshire. For those two counties to have different time zones would be incredibly inconvenient for me at times. That would be the level of boundary for Scotland or Wales. It may be right that one can change one's watch and get used to the pattern, but it is an inconvenience. How much inconvenience are we prepared to put up with? That is the fundamental question.

Baroness Miller of Hendon: My Lords, I congratulate the noble Lord, Lord Tanlaw, on his tenacity in introducing this Bill to your Lordships' House. I also congratulate him on the hard work and much research which he has done in order to present this Bill so excellently. It is one of the best researched Bills presented to this House for a long time. Not only was it well researched—full of the facts as he saw them—it was also an enjoyable speech to listen to, which is not always the case when someone has to reel out a great number of facts.
	A few moments ago, I referred to "tenacity" because after the short debate that your Lordships had on 26 January, initiated by the noble Viscount, Lord Montgomery of Alamein, the noble Lord, Lord Tanlaw, cannot be in any doubt about the Government's attitude. Of course, it may have changed since then. Perhaps I may remind the noble Lord, Lord Tanlaw, of the sentence with which the Minister closed the debate:
	"I cannot see the Government adopting Central European Time in the foreseeable future".—[Official Report, 26/1/06; col. 1384.]
	I am not quite sure what the "foreseeable future" is, other than the foreseeable future.
	The topic was also discussed and rejected by the Government during the debate on the Scotland Act 1998. However, the noble Lord, Lord Tanlaw, feels strongly about this issue. It is right that he should have the opportunity to bring it before the House again, especially at this time when the topic of conversation in thousands of homes around the country will be, "Do we put the clocks forward or back?". I know that in spring the clocks go forward and in the autumn they go back, but many people do not seem to know. The second question that people usually ask is: "Does that mean we lose an hour's sleep tonight?", as though that is the most important thing that could ever happen.
	The noble Lord, Lord Tanlaw, has advanced substantial and credible statistics in support of this Bill, as have other noble Lords. However, I should point out that there are cogent, contrary statistics in opposition to those figures. It is equally difficult to refute the argument about the discrepancies that ensue between Scotland at the northern end of Britain and Sussex or Cornwall in the south, although in a country such as America, time zones also run from north to south: southern California has the same time as Washington State, which is a lot further north. The noble Lord, Lord Monson, mentioned that Australia is another example with different times in different parts.
	During the war I was sent to bed in the early evening at what was a normal time for a child: from what I see with my grandchildren, that does not apply to today's children. I was able to read until nearly 10 pm without a light switched on. I must confess that I enjoyed that, but my mother was very concerned that I was losing sleep.
	Despite the arguments that have been advanced in its favour, I believe that there is a flaw in the Bill. The title "Lighter Evenings (Experiment) Bill", ignores the corollary of "darker mornings", although I listened carefully to the noble Lord. Nevertheless, some people do not like darker mornings. Those adverse effects cannot just be disregarded. A few noble Lords spoke about the need for public debate. Perhaps that is the way forward. I forget who suggested a referendum, but I certainly do not suggest that. Perhaps we need a larger debate on these matters.
	Parliament has to decide whether the disadvantages suffered by the farming and building industries, and the slight extra inconvenience suffered in the north of England, are a price worth paying for the benefit of fuel saving and the elimination of the many inconveniences of the twice-a-year ritual of changing the clocks. I do not mention Scotland—the Bill gives it an opt-out if its legislature so decides.
	I have a problem with the "experiment" aspect of the Bill. We have already had that experiment, not once, but twice: first, during the war when, as I mentioned, I could read in my room in the summer; and, secondly, there was a five-year experiment in the mid-1960s, which was ended by the Home Secretary, James Callaghan. We have therefore had a lot of experimenting. The facts and figures of all aspects of the proposal are known. The noble Lord, Lord Addington, emphasised that there are pros and cons, which need to be considered. Several noble Lords have said that it would be quite a good idea to have an experiment. However, if, at the end of the experiment, it is decided that the measure should not be made permanent, there would be the possibility of more chaos and disruption. Perhaps we should look to the past until we are able to consider it further. Until such a time, I am not sure that there should be another experiment.
	Equally, I do not think that there can be justification for the proposal that Wales and Northern Ireland should get an opt out. In theory, we could have a situation whereby Scotland and Wales are on one time, and Northern Ireland and England are on another time. This could bring chaos to business—for example, bus timetables and so on may seem less important, but, from a business point of view, the changes might create chaos.
	Nothing like this proposal has been seen since the early 19th century when standard time was established throughout the British Isles, instead of towns operating with their own clocks. Standard time was established to enable the railways to operate. Producing a jigsaw of different times would send us back to the Victorian situation before Brunel dragged us into the railway age. Let us be clear: this experiment would not just test the water for three years. The noble Lord, Lord Tanlaw, would also like the experiment to be successful and the beginnings of what he would like to occur.
	I was very pleased to hear the noble Lord on a radio broadcast yesterday. I quote from the BBC website:
	"A poll of more than 1,500 MPs, Peers, MEPs, MSPs, Members of the Welsh Assembly and other politicians suggests a substantial majority in favour of the Bill".
	I regret to tell the noble Lord, Lord Tanlaw, that I did not receive a copy of his form, so I did not know about that. Had I known, I could have said what I often say about polls: "Do you know, I have never been asked to fill in one and that I have never, ever met anyone who has?". However, I realise that in the House today, many noble Lords will have filled in the form.
	I hasten to say that I do not doubt the noble Lord's research for one moment. He has taken great care, which has been backed by many noble Lords, RoSPA and other bodies. We would need a major debate in order to decide on a three-year experiment. Whatever personal views some colleagues on these Benches may have, I regret to tell the noble Lord that we will not support his Bill.

Lord Sainsbury of Turville: My Lords, I am sure we are all grateful to the noble Lord, Lord Tanlaw, for his full and helpful explanation of the Lighter Evenings (Experiment) Bill. He made an extremely good case as far as one can for moving in this direction, but I have to say that my reply on this may be disappointing to him and to my noble friend Lady Billingham. I also make a fundamental point in response to the noble Lord, Lord Quinton: it is not the case that everyone agrees that there would be huge benefits and no costs. In fact, there is almost a complete split over the benefits and disbenefits.
	Noble Lords will be aware that the topic of introducing lighter evenings is a perennial issue and, indeed, was the subject of a debate in the House earlier this year. As those interested in the issue are also well aware, we have already undertaken an experiment of a similar kind. From 1968 to 1971 the British Standard Time experiment was carried out where continuous summer time, in other words GMT plus one hour, was adopted throughout the year in order to test public opinion. Objections were raised by the farming and construction industries, as well as others involved in outdoor work such as postal workers and milkmen, particularly those in the north of England and Scotland who experienced difficulties because of the late sunrise in winter. At the time they made their views very clear and there could be no mistaking their opinion. As a result of the experiment, following a vote in Parliament it was abandoned.
	It has been said that not many people start work early in the morning. I am afraid to say that lots of people do so, on construction sites and other places. It is not only the noble Lord, Lord Laing, who gets up to make his excellent biscuits; many others work or are making their way to work. Unlike the noble Lord, they do not like travelling in the dark. The noble Lord was a well-known workaholic, which meant that he produced wonderful biscuits for supermarkets, but I do not know that he is totally representative of the people of this country. I accept that that was a different world, but it is not clear to me that it was different in ways relevant to this particular issue. Yes, it was a horrible world in which people boiled Brussels sprouts to the point where absolutely no taste was left in them, but I fail to see how that is relevant to the question of summer time.
	Opinion on a move to Central European Time was canvassed more recently in a 1989 Green Paper published by the then government entitled Summer Time: A consultation document. The responses revealed again the huge divergence of opinion that existed on this issue. In fact, whenever the subject is raised, a wide range of views is expressed. What is also of interest and relevance here is the fact that another country has experimented with this more recently. The noble Lord, Lord Tanlaw, tried to explain away the situation in Portugal, but the point is that it did in fact move to Central European Time in 1992, but reverted to Greenwich Mean Time in 1996. It was concluded that the small energy savings could not justify the inconvenience the change created. It caused particular inconvenience through its impact on schoolchildren, which became a big issue in Portugal. The change had a very disturbing effect on children's sleeping habits as it would not get dark until 10 or 10.30 in the evening. It was difficult for children to go to bed early enough to have sufficient sleep. This had inevitable repercussions on standards of learning and school performance. Difficulties were also encountered with children leaving for school in complete darkness. Moreover, insurance companies in Portugal reported a rise in the number of accidents.
	The Government are well aware of the 1999 road study by the Transport Research Laboratory, and I agree with the noble Lord, Lord Addington, that it provides the most substantial and important evidence here. However, so far as one can make out, it was not borne out by the experience in Portugal. On electricity consumption savings, these were reported to be insignificant.
	I shall make one further general point about the Bill before I respond to the specific points. Certain provisions of the Bill amend Schedule 5 to the Scotland Act 1998. Its effect would be to alter the legislative competence of the Scottish Parliament. No doubt noble Lords will be aware that this would trigger the Sewel convention. The relevant provisions would therefore require the consent of the Scottish Parliament. Without that consent, the Government would be obliged to table amendments to the Bill to ensure that the convention is not breached. There is no likelihood of the Scottish Parliament agreeing to that change. It is also not realistic to talk about introducing a time difference between England and Scotland. If it is not a problem, what on earth is the argument for saying that there are huge benefits in aligning ourselves with Europe? Either there are benefits from aligning with other countries or there are not, but if there are, clearly a time difference between Scotland and England would have to be a disbenefit.
	I turn to one or two of the specific points made in the debate. In response to the noble Lord, Lord Tanlaw, I did not say that I know what people think; rather I merely reported that whenever this issues comes to Parliament, there is no surge of enthusiasm for it in the House of Commons, which suggests that members of the public are not going to their MPs and saying that they very much want the scheme. Further, one should always declare the response rate whenever one refers to polls. Polls of this kind can be deeply misleading because those who want to see change will respond, while people who do not particularly care or are against it may not respond. One must be careful with that kind of poll. One need only say at this point that the Bill will go to the House of Commons and representatives in the other place will no doubt reflect what they believe to be people's opinion.
	As regards trade with our EU partners, we simply do not find that there is any strong push from business to change the summer time arrangements, which would suggest that it is content with the current system. Indeed, trade investors have not raised it as an issue. Finally, such a change would have a negative impact on trade with the Republic of Ireland and Portugal as they are on Greenwich Mean Time. On energy savings, the Building Research Establishment has produced figures which indicate that a change would not lead to a reduction in energy use. Again, I did not say that all people would leave all lights on all day, merely that more people would do so, which would counteract the effect of any other energy savings. I have not seen the California study, but if it is important I shall reflect on it.
	On a reduction in crime rates, again different groups have different views on this issue. Assaults on and thefts from postal workers increase markedly from summer to winter due to the dark mornings, a situation that could only be worsened by imposing extra hours of darkness in the morning. There are just so many hours of darkness and if criminals want to commit a crime during those hours, they will simply choose the darker hours in which to do it. I do not think that they would be put off by the hours being different.
	The other main argument has always been the question of health benefits, tourism and sport, and how the change would bring a boost to people's morale and the health of the country by reducing cases of seasonal affective disorder. It is possible that we would all benefit mentally and physically from a change to lighter evenings. The mood of the nation could be improved, but equally other people think that the darker mornings are very depressing. Again, this is a question of balance. Some people would like it and some would not. Further, if it really could be shown that moving to double summer time would have an effect on obesity in children, I must say that I would be enormously enthusiastic about it. But there are rather deeper issues which lead to obesity in children than simply the amount of daylight in the evenings.
	In response to the noble Lord, Lord Monson, of course it is not easy to change when summer time starts and ends. It is covered very sensibly, I think, by the European Union in the 9th EC directive so that there is co-ordination across countries over when they begin and end summer time. I say to the noble Baroness, Lady Trumpington, that I do not think any part of industry would greatly suffer from this move. It is an issue for people who have to work early in the morning, and that could have an effect on the construction industry.

Baroness Trumpington: My Lords, I was thinking of the aircraft industry.

Lord Sainsbury of Turville: My Lords, I think these issues could be resolved fairly easily. I cannot see this as a great problem. It is a question of individual preference as to when people take exercise and do other things. Industry probably could adapt to the change but, equally, there is no enthusiasm in industry for it.
	Clearly everyone has their own views on this issue, with some individuals supporting change and others defending the current arrangements. Recent informal consultations with stakeholders representing both business and workers show that there is no strong desire to change, with some being strongly opposed to it. The present situation therefore appears to the Government to be a satisfactory compromise between those who prefer lighter mornings and those who prefer lighter evenings, and we see no reason to change it.

Lord Tanlaw: My Lords, I thank all those who have taken part in this very interesting—almost one-sided—debate and I thank profusely all those who have spoken in support of the Bill. I shall not mention them by name but their names will be mentioned and thought about because they have put forward their own expertise to support the case for an experiment.
	Perhaps I may take up the point made by the noble Lord, Lord Addington—which sounds very valid on the surface—that the Scots and Northern Irish might decide to keep a different time. My point is that they should have the choice. If the people of Northern Ireland and Scotland want to have a separate time, yes, I agree there may be problems—but the case should be properly put to them. The local governance and the devolved governance should ask the people of Scotland more succinctly than they have because every organisation that I consulted in preparation for this debate had never been approached or asked the question before. I hope that, if nothing else, the debate will arouse some greater interest.
	I am, first, encouraged by the nice words that the noble Baroness, Lady Miller, said in relation to the preparation of the Bill, but I am also depressed because I thought that there had been a change of view and that the old Toryism had changed into something that looked to the future and was innovative and different. I regret to say that nothing has changed at all. So I do not think there is much to look forward to there. The Minister cracked on and once more put forward statistics from the last century as the reasons for this.
	But, nevertheless, the people will see that both the Government and the main opposition parties are not moving on this because it is politically difficult for them to do so. However, I hope that others may be more efficient than myself and put forward a case in the future that this should be looked at. I would like the Bill to be passed and the other place to be able to make a decision on it.
	On Question, Bill read a second time and committed to a Committee of the Whole House.

Dynamic Demand Appliances Bill [HL]

Lord Redesdale: My Lords, I beg to move that this Bill be now read a second time. I must apologise to those people wandering into the Chamber that the Title of the Bill gives absolutely no indication of what it is about.
	The purpose of this Private Member's Bill is to enable a certification mechanism and market incentive for intelligent electrical appliances that are able to sense power shortages on the electricity grid and alter their consumption accordingly.
	Dynamic demand appliances contain a low-cost electronic microcontroller. This listens to the mains hum, which runs at a frequency of around 50 hertz. The signal can be detected through every plug socket connected to the national electricity supply. Through this signal, the dynamic demand appliances can sense whether the National Grid is under stress and adjust the time at which they use electricity. The technology is suitable for appliances that already switch on and off during the day on a "duty cycle", such as domestic and industrial fridges, freezers and water heaters.
	Millions of such appliances acting together would smooth out demand for electricity. This could allow for greater integration of variable sources of renewable energy, such as wind and solar. Such considerations are critical to long-term planning for the national electricity system if we are to achieve the high penetration of renewable energy necessary to meet and exceed Kyoto Protocol targets.
	Use of dynamic demand appliances would also cut carbon emissions by reducing the need for back-up generation on the electricity system. Currently, some power generators run at less than their full output so that they can continuously respond to changes in our electricity demand. Such generation is generally less efficient because it has to run partly loaded and at variable rate, resulting in additional fuel use and carbon emissions. Academics are currently working to calculate the likely carbon savings associated with dynamic demand. Best estimates so far indicate that this may be in the order of 2 million tonnes of carbon dioxide per year. To put this in context, 2 million tonnes of carbon dioxide is equivalent to approximately one-quarter of the amount that would be saved if the Government met their 10 per cent renewable energy target.
	The company which operates the National Grid currently spends around £80 million per year to commission the type of back-up service that dynamic demand could supply. Dynamic demand could therefore significantly reduce the costs of running the national electricity grid.
	Early computer simulations also indicate that dynamic demand could provide significant system stability on the electricity grid by being highly responsive to sudden loss of generation, such as the failure of a major power plant or the tripping-out of a nuclear power station. In times of system crisis, dynamic demand appliances sense the system conditions and automatically defer their electricity consumption.
	This is one of those simple yet powerful technologies with a huge potential to help curb climate change. As customers, we would notice no difference in the performance of our domestic appliances, yet our refrigerators and water heaters would be providing a continuous stabilising service to the electricity grid, reducing our dependence on inefficient back-up generation and preparing the system for variable renewable energy sources. This is an important point because it negates any need to educate the consumer in the use of appliances.
	A laboratory test of a dynamic demand refrigerator and freezer is currently underway by the independent appliance testing company Intertek. This test has been sponsored by the Market Transformation Programme of Defra to assess the effect of dynamic demand operation on the performance of the appliances and to ensure that food safety is maintained. I look forward to development of the testing programme into a field trial, to verify the findings of computer simulations of the aggregated effect of many dynamic demand appliances operating together.
	By supporting dynamic demand technologies through this Private Member's Bill, we will help to create the conditions conducive for this technology to become a market reality. We will also greatly enhance opportunities to develop UK expertise in demand-side energy management. This has a significant part to play in reducing greenhouse gas emissions and is an area of technology development that has global significance, especially in rapidly developing economies such as India and China.
	It is worth noting that a House of Commons Private Member's Bill containing a clause that deals with dynamic demand passed its Report stage on Friday, 17 March. That Bill—the Climate Change and Sustainable Energy Bill—would require government to identify and address barriers to the introduction of dynamic demand on the electricity grid.
	On Monday, 20 March, I hosted a meeting in the Attlee Room—I commend the Catering Department for a fine lunch—bringing together representatives of Ofgem, National Grid, DTI, Defra, the Market Transformation Programme, the Energy Savings Trust, appliance manufacturers, electronic component manufacturers, energy suppliers and academics. We discussed routes to market for dynamic demand. Participants identified the need for a reward system to incentivise the redesign of electrical appliances to provide valuable demand-smoothing services to the National Grid, with the significant public and environmental benefits that I have already outlined.
	Several companies have made forays into exploring the technology and its potential benefits, yet none can justify the investment needed to realise the benefits of dynamic demand technology at a national level, unless a financial incentive system is in place. Conversely, while the grid operator would benefit from the services, it would do so only once sufficient dynamic demand appliances are in operation. Provision of an incentive scheme, without public policy intervention, is therefore highly unlikely. It is that need that this Private Member's Bill seeks to address.
	Before I discuss the clauses in detail, I have three questions for the Minister to see how the DTI could help in developing dynamic demand. Could a field trial, involving appliances in people's homes, be undertaken? That would help us assess the exact effect on the power grid that an aggregation of appliances would have. Secondly, could the DTI fund computer modelling of the power system to assess the precise benefits in terms of carbon dioxide emissions? Thirdly, could it fund modelling to assess the benefits of many dynamic demand appliances in helping to smooth the variable power from renewable energy resources? So far, this work has been undertaken by volunteer organisations whose funding is coming to an end.
	I turn to the Bill. The first clause seeks the establishment of a standard for dynamic demand appliances and a certification process for this standard. The clause also makes provision for the establishment of an incentive mechanism to reward appliance manufacturers for making dynamic demand appliances and introducing them on to the UK electricity grid. The second clause defines the term "dynamic demand appliance". I shall now explain each of the clauses in greater detail.
	Proposed new paragraph (a) in Clause 1 requires the establishment of a dynamic demand appliances standard for electrical appliances. A standard is necessary to ensure that all dynamic demand appliance controllers behave in a way suited to the needs of the National Grid, achieve the desired demand-smoothing effect, support carbon efficiency and maintain proper operational standards such as food safety. A published standard will also help to encourage manufacturers, competition and innovation to meet the criteria.
	Proposed new paragraph (b) requires the establishment of a certification process. This would allow for independent testing and verification of manufacturers' claims against the agreed standard. The certification process should ensure that dynamic demand appliances fulfil system requirements, deliver on-system and environmental benefits, and provide full accountability for the financial incentive mechanism.
	Finally, proposed new paragraph (c) requires the establishment of a dynamic demand incentive mechanism, whereby manufacturers may benefit financially for each dynamic demand electrical appliance certified and connected to the UK electricity grid.
	At the event I hosted on 20 March, an electronic component manufacturer indicated that the likely additional cost of introducing a dynamic demand controller would be in the region of £3 to £4 per appliance. A fridge manufacturer said that while this seems to be a small amount per unit, the profit margin on electrical appliances is small, so dynamic demand technology would be highly unlikely to be introduced without a financial incentive or legal requirement to do so.
	Due to their significant potential for allowing greater integration of renewable energy on to the electricity grid, and reducing carbon emissions associated with electricity generation, dynamic demand technologies may qualify for incentives funded by the energy efficiency commitment. An incentive mechanism enabled by energy efficiency commitment funds is a very promising method to incentivise dynamic demand technology. However, this would also require further research to be undertaken. For example, it would be important to verify the carbon savings attributed to individual dynamic demand appliances to enable a proportionate financial reward. I recommend to the DTI that this study be commissioned as soon as possible. It is important to send a signal to appliance and component manufacturers that it is worth investing in the development of this innovative technology. I also hope that the Minister can confirm that the new clause in the Climate Change and Sustainable Energy Bill currently in the Commons, which refers to the energy efficiency commitment, will cover dynamic demand.
	Clause 2 simply defines the term "dynamic demand appliance" as meaning those electrical appliances that have the ability to adjust their electricity consumption or output according to instantaneous power imbalances on the National Grid. This definition is necessary to distinguish dynamic demand technologies from the many other demand-side energy management techniques that already exist but which do not involve individual appliances monitoring and responding to signs of system stress indicated by mains frequency. The definition is also sufficiently broad to allow for competitive innovation among manufacturers.
	The measures in the Bill are simple, practical ways of addressing barriers to the introduction of an innovative and useful technology that could help combat climate change. The figure of 2 million tonnes of carbon dioxide is a worthy target in anybody's book. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord Redesdale).

Lord Addington: My Lords, my noble friend has done a very good job of introducing this Bill. It is the sort of measure we should be looking at more closely across the spectrum of ideas. It is a way that we can practically address our power grid and how we reduce CO emissions, without ripping everything up and starting again.
	We are always being told that we have to change the way in which we behave, such as switching off appliances. With the best will in the world, if you happen to be a vaguely forgetful person, such as myself, you forget to switch something off as opposed to leaving it on standby. When the Division Bell goes, how many of us leave our computer on standby and do not get back to it? This technology removes that level of human error or thoughtlessness. If it is successful, it will help us cut down energy use. It is exactly the sort of approach we must take to improve energy savings and reduce carbon dioxide emissions. It will require the prodding and pushing that is required by government or somebody in authority to make sure that these things happen by attaching some responsibility—sticks and carrots—to those who produce these items.
	The Government will undoubtedly have a scheme or two with a similar approach. But these proposals have been brought forward—now—and the Government can give us an idea about their thinking. If my noble friend has a list of other such schemes up his sleeve, I invite him to tell us about them. This is one area where we should be working together and engaging with one another to make sure we all know what everybody in the field is thinking. I commend the Bill to the House and look forward to hearing what the Minister and my noble friend have to say.

Baroness Miller of Hendon: My Lords, in introducing the Bill so ably, the noble Lord, Lord Redesdale, has explained that it is to assist with the saving of fuel, to make the best possible use of finite resources and last, but by no means least, to assist in the reduction of CO emissions. And who could possibly argue with any of that? The question is, what are the practicalities?
	In this country, there are more than 24 million households. It is fair to assume that in this modern day and age, something like 20 million of them have refrigerators, but, for the sake of the debate, let us say just 18 million. They have a life of around 20 years. How long will it take before all the fridges will be changed to the new technology—or enough of them to make a difference—and why would anyone want air conditioning that worked late at night when it is cooler anyway or central heating that did not work when it was coldest and at the time of maximum demand?
	I digress for just a moment. Perhaps the most immediate and effective dynamic demand device would be if we could persuade people not to leave their TVs, video recorders and DVDs on permanent standby. I read last week that in an average household that can cost more than £30 a year. How much fuel does that waste and how much pollution does that cause?
	All that the manufacturers have to do in the interest of world ecology is to remove the standby facility. It is not too long in the past when a TV was either on or off, with nothing in between. A moment ago I used the word "persuasion". I did so because I believe that it is up to industry to produce fuel- and energy-saving devices and, having done so, to persuade the public of the advantages of buying and using them. I do not believe that there is a place for the provision by our Government—meaning, of course, the British taxpayer—giving, as this Bill calls for, financial incentives to the manufacturers of fridges, TVs and other electronic goods. That is especially true when—and this is the sad situation—so many of them are manufactured abroad including in the Far East. That is even assuming that "financial incentives" is not code for a "subsidy" which may very well be illegal under EU law.
	Of course the Government have a part to play in encouraging energy saving and the optimum use of energy in every reasonable way, sort and form. My own party will most certainly be looking into dynamic demand technology as part of its present ongoing energy review. But it is up to industry to develop the technology and to persuade the public that they want and need it. I would commend to industry a paraphrase of the aphorism attributed to Ralph Waldo Emerson. If they build a better and more fuel efficient device, the world will beat a path to their door.

Lord Sainsbury of Turville: My Lords, the issues raised in the Bill are extremely important, and for those of us wrestling with the Company Law Reform Bill, which has 980 clauses, a Bill of two clauses has an immense attraction. While we are not supporting the Bill, its concerns are ones which the Government intend to address. I therefore welcome the opportunity given us today by the excellent speech by the noble Lord, Lord Redesdale, to respond to the noble Lord's proposal, and to set out how the Government are looking to understand the contribution that dynamic demand appliances can make to energy efficiency and security of supply.
	I hope that, by the end of my comments, the noble Lord will see that there is little difference between us in the overall belief that these technologies can make a contribution to energy efficiency. There may be differences in the implementation, but I hope that I can demonstrate to noble Lords that, in general, the Government are on the same wavelength as the noble Lord.
	Dynamic demand technologies are technologies which enable the consumption or generation of electricity to be controlled or adjusted automatically according to network frequencies. They are devices that can adjust the demand of our appliances to help balance the load on the grid. If they sense, through an assessment of the frequency levels, that demand is growing, then they will, for instance, turn the fridge down. In theory that will help energy efficiency as well as security of supply at peak periods. We all know of the surge that takes place at half-time during cup finals. These appliances ought to help manage the demand/supply relationship at those times.
	The overall benefit of these technologies is that a smoothed demand pattern leads to reduced need for back-up generation. The figures that I have suggest that that could save up to 0.6 million tonnes of carbon per year, although I suspect that both my figures and those of the noble Lord are speculative.
	We are already taking steps to see how we can harness this technology. As the noble Lord said, Clause 15 of the Climate Change and Sustainable Energy Bill currently making progress in the other place will impose a duty on the Secretary of State to publish a report on the contribution that dynamic demand technologies could make to reducing greenhouse gas emissions in Britain. The report will also address whether it is appropriate to take any steps to promote the use of such technologies, and, if it is, what those steps might be. We will produce this report no later than 12 months from commencement. I can assure the noble Lord that appropriate resources will be found to produce a thorough report. Noble Lords might like us to go further than that, but without this initial work it will be difficult to target any support or understand where there might be a market failure. We have done very little proactive work in this area to date, although we have kept up to date with developments. It is clear that these technologies deserve closer investigation to establish how much of a contribution to energy goals they can make. Clearly, any such study would have to address the three questions which the noble Lord raised before we could get an understanding of the benefits and costs.
	Also, within our liberalised market we need to understand who stands to benefit from an uptake in these technologies. It would seem that the system operator might benefit, as might suppliers who pay more for their electricity during the peak periods. Generators too have a stake in that the decision to invest to cover the peak periods is often a difficult one—investing to build capacity that may be used for only a few hours a week needs careful consideration. However, if private business is to benefit, it should have a role in developing and encouraging the take-up of these appliances. That, among other issues, is something we need to explore.
	The noble Lord's Bill also asks the Secretary of State to establish a standard for dynamic demand appliances. I am not sure why the noble Lord wants to leap immediately to a legislative and regulatory solution. It might be worth while for industry to consider its own voluntary scheme before we burdened it with more legislation from Parliament. I agree with the noble Baroness, Lady Miller, that of equal interest is how manufacturers can work to minimise the amount of energy used in domestic appliances. I am not talking only about when appliances are being used, which is important, but also when they are not. We all know about the waste caused by the standby button. Strange though it may seem, a typical microwave oven consumes more electricity powering its digital clock than it does heating food. While heating food requires a hundred times as much power as running the clock, most microwave ovens stand idle in standby mode more than 99 per cent of the time.
	Moreover, if we are deeply concerned about obesity in children, perhaps we should encourage them to stand up and walk to the television to turn it off.
	These issues will be covered by Defra in its market transformation programme, which the noble Lord, Lord Redesdale, mentioned, and which is looking with industry and other stakeholders at the environmental performance of products. Could dynamic demand appliances be included in the Climate Change and Sustainable Energy Bill? The short answer is that in theory there is no reason why dynamic demand appliances cannot play a part. I am sure that we will debate that further when that Bill comes to this House.
	Dynamic demand technologies are already here and they can support our energy goals. However, we need to be sure that any approach we wish to take will help to accomplish that in the most beneficial and cost-effective way. I congratulate the noble Lord on drawing the House's attention to the opportunities that the technologies open up. I also hope that my comments offer sufficient reassurance to noble Lords that the Government are determined to understand what contribution dynamic demand appliances can make. If our report shows that the work is needed to help deliver the potential, we will do so.

Lord Redesdale: My Lords, I thank the Minister for that reply, the noble Lord, Lord Addington, for his helpful comments, and the noble Baroness, Lady Miller. Perhaps I may deal first with the comments by the noble Baroness. There were a couple of misconceptions here. I believe that the Conservative Party in another place is already supporting dynamic demand—indeed, my reading of the debates on the Climate Change Bill in another place gave every impression of that. The noble Baroness asked how long it would take for the technology to have an impact. According to manufacturers, 3.75 million new fridges are bought in this country every year. I find that a frightening statistic. My own calculations, which are not based on a degree in electronic engineering, show that if 2 million devices were fitted with dynamic demand, that would equal the output of the largest of the nuclear fleet of power generators, which is some considerable amount.
	The Minister raised a number of valuable points, including the issue of self-regulation. I would quite happily introduce a Private Member's Bill on standby. I personally find it quite unbelievable that 10 per cent of power generation is being used up in standby and utterly useless features added by manufacturers to meet public demand. However, I very much hope that the Government will support the voluntary code undertaken by the white goods manufacturers to move to 1 watt standby over the next couple of years, which will have a significant impact on energy consumption.
	The Minister also referred to the spike during football cup ties when people go off and put their kettles on. I was interested to find out that that is not actually what causes most of the spike; most of it is caused not by people putting the kettle on but by a lot of them going to the loo at the same time and flushing it. The mechanical energy of moving billions of gallons of water around the country far exceeds the amount used to boil kettles. That is the sort of interesting fact that you find out when you have to do a great deal of work on these Bills.
	The purpose of this Bill, and of any Private Member's Bill, is to push the Government into thinking about the issues. The likelihood of it succeeding through all the hurdles is a real issue. However, one thing which I believe this Bill has been able to do is to bring together all those who are thinking about this issue and to focus their minds. I believe that dynamic demand will become a reality. I very much welcome the Minister's encouraging words on moving towards doing the background work to find out whether there are any pitfalls with the technology. Obviously, it would be madness to move forward too quickly without finding out whether there are any problems with it. However, I concede that it is an issue because, unlike getting rid of standby, which would mean people getting off their seats to turn something off, this is a device that nobody would know was in their fridges.
	I very much take on board the point that the Minister made—that this is about finding a market mechanism, and that those who are benefiting from the system should pay for it. In this case the consumer would not save any money and the appliances would not operate in a different way. The noble Baroness, Lady Miller, said that we would have to turn things on on a different cycle, but in this case no fridge would change its cycle at all. But it would be up to the National Grid to meet the costs. That means finding a way in which it could do so, which cannot be done without a change in primary legislation and a change in the energy efficiency commitment, which has been the hurdle at this point. I believe that that will be changed under the Climate Change Bill, which I very much look forward to debating . I thank the Minister for his most helpful reply.
	On Question, Bill read a second time, and committed to a Committee of the Whole House.

Guardian's Allowance Up-rating (Northern Ireland) Order 2006

Lord McKenzie of Luton: rose to move, That the draft order laid before the House on 13 February be approved [19th Report from the Joint Committee].

Lord McKenzie of Luton: My Lords, we shall debate the four related regulations and orders together. Tax credits, together with child benefit, deliver financial support to the vast majority of families with children in the UK and are vital in our commitment to tackle child poverty. I am pleased to introduce these regulations and orders, which increase certain elements and thresholds of tax credits, and raise the main rates of the child benefit and guardian's allowance. In my view, the regulations and orders are compatible with the European Convention on Human Rights.
	First, I turn to the Tax Credits Up-rating Regulations 2006. Tax credits play a major role in ensuring that work pays and in helping people to move up the employment ladder. Overall, 5.9 million families containing 9.9 million children are benefiting from tax credits. These regulations increase the child element of child tax credit by £75, in line with earnings, to £1,765 a year from 6 April 2006. The tax credit has increased by £320 since its introduction in April 2003 and it benefits 6.7 million children. In addition, the regulations increase the disabled child elements of child tax credit in line with inflation.
	The elements of working tax credit will also increase in line with inflation. The working tax credit provides support to low-income working families, including people who do not have children. The tax credit system has been designed to offer support to people as they move between jobs and as their circumstances change. Building on the lessons from the first two years of tax credits, the Pre-Budget Report announced a package of measures to improve the system. These measures will ensure that the system strikes the right balance between providing a stable award and maintaining the ability to respond to changes.
	To reflect changes in annual income, a tax credit award can be revised during the tax year and is finalised at the end of the tax year. Currently, the first £2,500 of any rise in annual income is disregarded. However, incomes have been much more volatile than expected, with short-term fluctuations making it difficult for people to give an accurate estimate of annual income. Therefore, these tax credit regulations increase the disregard for income rises to £25,000. For almost all families, this ensures that a rise in income will not lead to a fall in tax credit entitlement in the first year of the rise. The Pre-Budget Report package has been widely welcomed, by, for example, citizens advice bureaux, the National Council for One Parent Families and the Child Poverty Action Group.
	I turn to the Child Benefit (Rates) Regulations 2006 and the guardian's allowance orders. Child benefit benefits almost all families in the UK and these instruments will increase rates in line with inflation. From 10 April 2006, child benefit will be worth £17.45 per week for the first child and £11.70 for each subsequent child. For the first child, this represents a 25 per cent increase in real terms since 1997. Guardian's allowance will increase to £12.50 per week. The Child Benefit (Rates) Regulations also have the effect of replacing and consolidating the Child Benefit and Social Security (Fixing and Adjustment of Rates) Regulations 1976.
	With the increases effected by these instruments, we will be delivering even more support next year. We remain committed to the Government's long-term aim of eliminating child poverty within a generation and halving it by 2010, and tax credits and child benefit will remain a key part of this. Indeed, in his Budget, my right honourable friend the Chancellor of the Exchequer made a commitment to increase the child element of the child tax credit at least in line with average earnings until the end of this Parliament. I commend these regulations and orders to the House. I beg to move.
	Moved, That the draft order laid before the House on 13 February be approved [19th Report from the Joint Committee].—(Lord McKenzie of Luton.)

Baroness Noakes: My Lords, I thank the Minister for introducing these orders and regulations. I initially agreed to debate the four instruments together on the understanding that they raised similar issues. When I got into the detail, I realised that this was not entirely true, but I have only myself to blame for that, so I, too, shall speak to all four together.
	I do not believe that the first three instruments—the two guardian's allowance orders and the child benefit regulations—are controversial. To the extent that they uprate existing benefits by the movement in RPI, they are routine business. I would, however, like to clarify the nature of the uprated figures. The notes for the guardian's allowance orders helpfully tell us that the rate of RPI increase is 2.7 per cent, but they do not say over what period that was measured. It is only 2.4 per cent at the latest reckoning, so will the Minister say over what period the 2.7 per cent is measured?
	The child benefit regulations do not mention the RPI rate at all, but I have calculated the increases actually applied as being 2.5 per cent for the guardian's allowance and 2.6 per cent for the two levels of child benefit. Will the Minister explain the rationale for these figures and will he explain the Treasury's policy towards rounding? I believe that it is the practice of the Department for Work and Pensions to round up. We perhaps should not be surprised to find the Treasury rounding down, but it would be helpful if the Minister can clarify policy in that regard.
	I have one further question on the child benefit regulations. Regulation 3 has certain transitional provisions. The Explanatory Notes explain that they are to deal with transitional protection, but do not explain in what way. What type of child benefit will be paid under these provisions? By definition, they are paid to persons not qualified under Regulation 2. How many entitlements will there be? How much will be paid, and for how long?
	I turn now to the tax credits regulations, and I will start with the easy bit. I tried to find out on what basis the Treasury had amended the tax credit scheme to take account of inflation. According to the Explanatory Notes, the Treasury is supposed to lay a report before Parliament each year setting out what would be required for the tax credit scheme to retain its value. The Explanatory Notes to the regulations did not give any further information—in fact, they left a square bracket for that particular information—but one of the Minister's very helpful officials sent me a copy of the Treasury's report. It shows that the Treasury, in maintaining the value of benefits and thresholds, has used rates of between 2.7 per cent and 3 per cent, which appears to be using something slightly higher on the whole than the RPI calculations. Alternatively, it is using the RPI figure of 2.7 per cent and doing a fair bit of generous rounding-up. I hope that the Minister will explain the Treasury's approach to calculating the maintenance of the value of the benefits and thresholds in line with inflation, in particular compared with the other instruments in this group.
	While the Treasury has calculated the amounts necessary to protect the value of the amounts or thresholds, the regulations do not give inflation protection on a comprehensive basis. For example, the family elements of the child tax credit are left unchanged, as are some of the thresholds. Will the Minister set out the rationale for the various changes that have been made to the amounts and thresholds in the Tax Credits Up-rating Regulations?
	I now come to the more important issue: the tax credit scheme itself. We know that the Government have completely mismanaged the implementation of tax credits, with the result that billions of pounds of tax credits have been overpaid and underpaid. We also know that the insensitive way in which Her Majesty's Revenue and Customs then acted in withdrawing credits and pursuing overpayments resulted in great hardship for many who were caught up in the mess, to the extent that some even became reliant on food parcels in order to survive. The Government have never issued a word of apology for that. The Government's tax credit system has also been undermined by massive fraud; somewhat belatedly, the Government closed down the online portal.
	We know that tax credits are the brainchild of the Chancellor, but when they started to go wrong he was nowhere to be seen, and it was the Paymaster General who had to appear at the Dispatch Box to try to spin her way out of the extent of failure of the scheme. Perhaps it surprises no one that the Chancellor has not yet owned up to the fact that the scheme needs a radical rethink. Instead, the Government have produced a series of sticking plasters designed to give the scheme some semblance of operability. The tax credits regulations before your Lordships' House today contain one of those sticking plasters—a very large one.
	As the Minister explained, the order increases the income disregard from £2,500 to £25,000, in effect putting the tax credit scheme for most practical purposes on to a prior-year income basis. We have tried hard to find out the cost of this massive change to the construction of the scheme, but the Government have hidden behind a complete fiction—namely, that the cost of this change cannot be separated from the other changes to tax credits announced in the Pre-Budget Report. We know that it is a fiction because officials from HMRC told the Public Accounts Committee in another place that they had the calculations. Since then, though, they have been prohibited from revealing them by the Treasury. Any accountant knows that it is perfectly possible to calculate the effect of one element of a number of changes. It just requires a little logic.
	The PBR changes to the tax credit scheme overall were said to cost £100 million in 2006–07, but to produce savings of £200 million in 2007–08. In the past, the Government have said that the £2,500 disregard cost £800 million. If income volatility is indeed a feature of the income groups affected by tax credits, we might conservatively guess that the new disregard of £25,000 might cost three or four times that—around £2.5 billion, say. That means that the Chancellor's other measures in the PBR—namely, the timing and the increasing checks—are expected to produce reductions in tax credits of roughly that amount. That is why this issue is important. We need to know who is affected by the changes. Will it be the poorest, who need the tax credits most, or will it be middle England, who, with the £25,000 disregard, can now be within the means-tested benefit net at income levels of over £90,000? We do not believe that there can be a sensible debate about the elements of the changes to the tax credits that were made in the PBR until the Government are honest about the cost and incidence of the individual elements of the package.
	My main question to the Minister today is: will he come clean on the cost of the increased income disregard set out in these regulations, and indeed of the other elements of the changes to the tax credit package set out in the PBR? Will he also say whether the Government yet have any strategy to get themselves out of the tax credit mess?

Lord Oakeshott of Seagrove Bay: My Lords, I will deal with these four instruments in the order in which they are set out before us. I have no objection to the first two, but I have a question. On the Guardian's Allowance Up-rating (Northern Ireland) Order, I was interested to read that,
	"the Treasury have determined that the general level of prices was higher at the end of the period under review than it was at the beginning".
	I could have told it that from my weekly shop at Tesco in Kennington. But the serious point, given that we talk about Great Britain and then make this order in Northern Ireland, is this: are there any separate figures available for the different rates of increase in the cost of living over the years in Northern Ireland against Great Britain, which of course does not include Northern Ireland? To put it another way, would the lady in the Belfast supermarket be having the same experience of rising prices as we have in England?
	I turn to the tax credits regulations. I do not propose today to follow the noble Baroness, Lady Noakes, in her analysis of the problem. I certainly share her analysis, and my honourable friend David Laws has led the way in exposing this chaos in the House of Commons. Frankly, the way that the Government, and the Paymaster General in particular, have refused to answer perfectly reasonable questions about the breakdown of the estimates of the cost saving has been a disgrace. I have read the minutes of the Paymaster General's oral evidence to the Treasury Committee on 1 February, and I am bound to say it is one of the most embarrassing performances that I have ever seen by a Minister. She repeatedly has to say things like:
	"I am going to ask Tony to do this. I am really flagging now".
	She has been flagging most of the time. We then get an answer from the official on the composition of costs:
	"It is roughly what we expect to happen with the different factors interacting in that package once we get to steady-state".
	They just all run off into jargon. At the end, the Chairman has to say:
	"In your opening statement you said the 25,000 was designed to assist the 200,000 people who move to new and better jobs. If that is the case, why is it not possible to cost the disregard, to tell us roughly how much it is going to cost?"
	Again, he gets a classic non-answer.
	This episode, more than anything else, shows how difficult it is—indeed, what a scandal it is—that no single Treasury Minister has any business experience at all. I am delighted that that does not apply to the noble Lord on the Government Front Bench today, but he is a Whip manning an outpost, not a Minister in the Treasury. Like the noble Baroness, Lady Noakes, I demand—I do not think that is too strong a word—a proper breakdown. If the noble Lord is not in a position to supply one today, will he take back to the Treasury the message that we in this House are not happy with the lack of proper explanations for the costings here?
	Finally, the child benefit rates regulations are not significantly controversial, like the first two orders, but I wonder what the position has been. I believe that the position of second and third children was significantly de-indexed under the Conservatives. They slipped back a long way and there does not seem to have been much of a pick-up under the Labour Government. Can the noble Lord help me on the background for that?

Baroness Hollis of Heigham: My Lords, like other noble Lords, I welcome the uprating statement, in particular the Budget announcements on tax credits. We know that if we are to continue our successful story in trying to beat child poverty, by definition benefits, particularly child tax credits, have to rise faster than earnings in order to go above the median 60 per cent figure. That is a tall order and the commitment of the Government to that and the willingness of the Chancellor of the Exchequer to fund it are impressive.
	The big problem about tax credits has been that in the 200,000 or so movements a year that we get in tax credits, the really big move beyond the £2,500 figure was of the second parent in a relationship going back to work. I suspect, but I have no evidence for it, that the figure of £25,000 may have been aligned with median earnings, roughly speaking, to cope with the effect of the first year.
	The noble Lord, Lord Oakeshott, is absolutely right about child benefit and second and third children. We are increasingly seeing that poverty is focused in larger families, often workless families, rather than in smaller families. Therefore, I hope that my noble friend will take back the noble Lord's argument that we should be strengthening payments going to second and third children to mitigate the poverty in larger families. Half of poor children now live in larger families. Some help on the structure of child benefit or in tax credits would be welcome.
	I wish to comment on a small benefit that we seldom debate: guardian's allowance. I welcome the uprating. It used to be stewarded by the Department for Work and Pensions but a few years back it rightly went to the Treasury. Guardian's allowance is a modest additional allowance that is paid to a guardian—usually a grandparent, sometimes an elder sibling—to care for a qualifying child who has no parents. A parent cannot receive this allowance. The carer has the child benefit book. It was originally designed for orphans; for example, a child orphaned because his parents were killed in a car crash. Over the years, the allowance has been tweaked a little to extend it to "moral orphans"; that is children whose parents have disappeared off the landscape, usually because one parent is dead and the other is in prison or in a long-stay mental health hospital. As a result, we have been able to get a little additional money—£11 or £12 a week—in addition to tax credits and child benefit to elderly grandparents, often pensioners, who late in life take on guardianship responsibility for a child who has no parent to care for him and who would otherwise go into the official care system where fostering costs are £300 per week or more.
	How many children does it affect? My figures are out of date, so my noble friend can correct me if I am wrong, but they show that this allowance helps some 3,000 children a year at a cost of about £2 million per year. It is a tiny benefit. Today, I ask my noble friend to see whether he can extend a little more widely the concept of a moral orphan—a child whose carers or guardians receive guardian's allowance—in order to provide a more generous description. I was triggered to ask him this by a letter I received a couple of days ago. I have changed the names to anonymise the people. Mr and Mrs James are in their 60s and are shortly to retire. They have a teenage grandson, Pete. Their daughter died in hospital five years ago and, following that, her partner turned to drink and drugs. He is now addicted and has lost his home. Pete went to his grandparents to be looked after rather than go into the formal care system. The grandparents receive tax credits of about £10 per week and child benefit. All together, they receive an income of about £28 per week for Pete, which by no means covers the cost of a teenager. They applied for guardian's allowance and, technically quite correctly, the decision-maker refused it because when their daughter died they knew the whereabouts of the child's father. It was a matter of timing. Had the partner disappeared at the time of their daughter's death, they could have applied for and got guardian's allowance. Had they applied for and received guardian's allowance and the partner subsequently reappeared, the guardian's allowance would not have been removed from them. They would have kept it.
	As it is, they have had no contact, so far as I know, with the child's father—he has been off the landscape for three or four years. Yet, under the small print of the formula, although they are grandparents approaching pension age, already very hard-pressed looking after their grandson, who they love to bits, to avoid him being taken into care, they are financially penalised because of the way that we have drawn up the description of the guardian's allowance.
	It is small beer money, £2 million a year among some 3,000 children, but it has been key to keeping many children out of the formal care system with the financial cost that brings and the huge emotional damage that it can do. We know what happens when children go into the formal care system; they seldom do as well as they would if they remained with a member of their extended family. I am not criticising the decision in the case I cited; it was technically correct. However, I ask my noble friend to take this matter away to see whether we can use guardian's allowance more widely. Before this allowance went over the Treasury, the Department for Work and Pensions was exploring whether it could be used in a more generous and sensible way to help members of an extended family care for a child when there was genuinely no parent in play. That is often because one parent has died, but may be because the parent is in prison or a long-stay hospital or because, as a result of mental health problems, substance abuse and the like, the child can no longer be cared for by the parent and the parent cannot reasonably be expected to provide financial support. The whole burden of responsibility falls on the grandparents.
	I leave it to my noble friend to explore whether this requires primary legislation or whether it can be done through looking at tax credits, but I ask him to take this issue away and follow up the work that should have been done several years ago. We started to make the concept more generous, but we did not get far enough before the stewardship passed. I ask my noble friend to take up the baton today to see whether we can help to keep more children out of the care system by rethinking the role of the guardian's allowance.

Lord Biffen: My Lords, I apologise to noble Lords and particularly to the Minister for not being present at the beginning of this debate. Having had an enervating morning in a hospital bed, I have come along to offer a small comment. It will not be of the same contentious nature as those offered by my noble friend Lady Noakes and the noble Lord, Lord Oakeshott, which demonstrated the great anxieties about how this policy has been executed. I will confine my remarks to the tax credits uprating regulations.
	In the situation revealed in this morning's debate, there must be some anxiety over the divorce between the objectives of policy and how they are being achieved. I cannot believe that this is entirely the result of Treasury ineptitude. I therefore wonder whether use has been made of consultants in the preparation and execution of this policy. Perhaps the Minister could confirm whether that is so and, if appropriate, indicate those consultants' names. I am asking for no more than that. Of course, I do not expect it to be answered in the Minister's wind-up to this short debate, but it would be helpful to have it on the record.

Lord McKenzie of Luton: My Lords, I thank those who contributed to the debate on these orders and regulations. It has been an interesting review. I will seek to deal with each of the points raised.
	The noble Lord, Lord Biffen, asked whether consultants have been involved in the construction and operation of the tax credit arrangements. There was originally IT system support from EDS; the issues surrounding that contract have been aired in the public domain, and a settlement reached. Capgemini is the current IT contractor. I am not sure, and do not have data on, whether consultants were used more extensively in the system. I will come back to the central point of why the system, as structured, will inevitably have overpayments and underpayments; it is inherent.
	I acknowledge the longstanding work of my noble friend Lady Hollis in this area, and her knowledge of the subject. She will be aware that guardian's allowance was never intended to provide support for children generally. The provision of financial support for children is and remains the responsibility of parents. Where parents abandon children to the care of others, it is for local authorities to consider what additional help might be forthcoming. However, I acknowledge her important point and undertake to draw it to the attention of my right honourable friend the Paymaster General, who I am sure will get back to her on this key matter.
	The noble Baroness, Lady Noakes, asked about the basis of the uprating. I hope I can satisfy her on her queries. The rise in the child element of the child tax credit is linked to earnings: 4.2 per cent. I think that is the average of the three months to July of last year. The RPI basis is the rate applicable on 1 September of last year: 2.7 per cent. The noble Baroness asked more generally whether it is policy to round up or down. I do not have anything specific on that, but I believe that it is rounded to the nearest 5p, whether that is up or down. If the position is different, I will ensure that she is informed of the principle.
	The noble Lord, Lord Oakeshott, raised issues about child benefit generally, whether it was falling behind, and what has happened in relation to the second child. Child benefit is an important component of support for families with children. As I said in presenting these orders, it has increased 25 per cent in real terms for the first child since 1997. For the second and subsequent children, it has been uprated by reference to the RPI. That is in stark contrast to what happened before this Government came into office. There was a three-year freeze in child benefit between 1988 and 1990, so this Government have a good record on that.
	The noble Baroness, Lady Noakes, asked about transitional provisions in the regulations. The transitional regulations continue to provide entitlement for certain lone parents who have been continuously entitled to child benefit lone parent rate since it was abolished in 1998. The transitional regulations will enable these people to receive child benefit lone parent rate if they cease to be entitled to specified benefits which currently prevent payment of child benefit lone parent rate, or they come off income support or jobseeker's allowance to start work. The child benefit lone parent rate is payable only for the first child, and has been frozen at £17.55 for the past few years. It will be extinguished when the normal enhanced rate increases above £17.55. Perhaps the noble Baroness will look at the record on that and, if she requires anything further, come back; I am sure we can satisfy her on that point.
	The cost of the pre-Budget report package of measures was raised, as it has been elsewhere. I stress that there is a package of measures here with components that are a cost to the Exchequer, including the £25,000 disregard. There are also components which are a yield to the Treasury: the shortening of the renewal window; the mandatory reporting; the collection of original income estimates; the reduction in time allowed to report changes reducing entitlement; and the withholding of accrued underpayments. These have been costed as a package, because they interrelate. If you stripped away individual bits of it, the outcome would depend on the order in which you took them. I reiterate the point made by Treasury officials before the public accounts hearing: it has been costed as a package and that is the information which has been provided. I do not think I can reasonably add to that.
	There was some speculation about the increase in the cost of the disregard being two to two and a half times the £800 million for the £2,500 disregard. We do not accept that assumption, as many families experience relatively small income rises over a year, and the £2,500 disregard benefits many families. Obviously, comparatively fewer families will be affected by the disregard up to £25,000.
	A question was raised about why there was no uprating of some components, and why the Government are freezing the CTC family element. Obviously, there is a finite resource that can be applied to this uprating. The Government have to find the right balance, given limited resources, between supporting families with children across the whole income range, and appropriately targeting support on families with lower incomes who need it more. This is why we have concentrated on the particular increase in the component of the child tax credit, and not generally uprated those other components.
	On the alleged mess of the child tax credit system and the tax credit system generally, we should acknowledge that it has been of huge benefit in helping to lift children out of poverty: some 700,000 children since 1997. The working tax credit is about encouraging people into work, facilitating their transfer into it and making it pay. That has been hugely successful across the board: some 2 million more people in employment under this Government. When the system was designed, it was acknowledged that, because it is responsive—it is not based on fixed income of a prior period, responding to changes during the year—you will inevitably end up with underpayments and overpayments at the end of the year, when a squaring-up has to be done. That is an intrinsic part of the design of the system. Yes, there were some particular challenges at the start of the system, such as a learning curve as to the number of families who would increase their income or go into employment, which were not anticipated. There were certainly also difficulties with the IT system. Each of those is being worked through and addressed. That is why the package that my noble friend introduced in May last year, looking at administrative changes and the changes in the pre-Budget report, has been so important in making sure that the system works more effectively and is reaching the people that it should.
	The benefit is reaching in the first year just under 80 per cent take-up, and 90 per cent or 91 per cent of the poorest families were availing themselves of those important measures. That is making a real difference; it is transforming their lives in a very positive way. The Government stand fully behind the tax credit system. The noble Baroness said that she is looking to see it reformed; we would be interested to see in what way she considers it might be reformed. We have not heard any detail of that.
	We need to make sure that we deal with issues of fraud. Particular issues arose in November last year associated with identification theft from Network Rail and from DWP. That was spotted very early on in the system, and HMRC acted to stop that. It stopped making payments, and a range of investigations are under way to deal with that. Again, this is a significant system—the annual cost of the tax credit system is £12 billion to £13 billion. It was inevitable that there would be some targeting of fraud on the system, which is why protections were put in place. We need to be ever vigilant on these matters.
	I refuse to accept the assertion that things are in chaos. This is helping lots of families in a very real way, particularly families with children. I am not sure whether I have answered each of the questions that have been raised. If I have not, I am happy to have another go.

Baroness Noakes: My Lords, the Minister has repeated the refusal to give the costings of the elements of the package of changes made in the PBR, and perhaps that did not surprise us. He said that it cannot be done; of course it can be done. Before they made their decision on the package of changes, did the Government have any analysis put to them of the effect of the individual changes, in particular the incidence of the changes in numbers of tax credit recipients from the different elements of the package? What sort of analysis was made available to the Government before they decided on this so-called package?

Lord McKenzie of Luton: My Lords, I do not have the precise detail of what was submitted to Ministers before me. I reiterate that these matters were looked at as a package, because the order in which you unpick the individual components could impact on the amount that you attach to each component. The work has been done, looking at it as a package, and I believe that is the correct way to do it. Those figures have been put clearly before both Houses.

Lord Oakeshott of Seagrove Bay: My Lords, that really will not do. No business considering a plan could possibly not look at the individual elements in that package. While one understands that there may be inter-relationships and there may be behavioural changes, it is quite ludicrous to say, as the Minister is saying, "Trust us; we are the Treasury". Frankly, we do not.

Lord McKenzie of Luton: My Lords, I am not saying that. I am saying that the package of measures has been costed. That costing has been laid out in the Pre-Budget Report, and it has been extended since so there is a five-year projection of the costs, benefits and savings that come from it. It is entirely appropriate to look at the whole package of the measures that were introduced together as a development of the system.

Baroness Noakes: My Lords, if the Minister persists in the view that it has to be looked at as a package, will he nevertheless say for the package overall how many individuals suffered from the introduction of the package and how many did better from the introduction of the package?

Lord McKenzie of Luton: My Lords, that depends on how people respond to the package. Obviously, those people whose incomes increase beyond £2,500 in a period who will not have that clawed back are potential beneficiaries, but the need to report income earlier and to respond to other elements of the package could have an adverse effect on such individuals. We believe that the overall impact could reduce overpayments from rises in incomes by one-third by 2007–08.
	I have tried my best to deal with questions on that matter. I have been consistent with explanations given in another place and to the Public Accounts Committee. As I said in my introduction, these regulations and orders increase certain rates and thresholds and are in line with the Government's commitment to make work pay and tackle child poverty.
	Tax credits provide financial support to nearly 20 million people. They play a major role in moving people into work and aid mobility of labour, helping men and women move up the employment ladder, thus achieving the Government's aim of greater employment flexibility. The policies have combined with economic stability, which has helped to increase the number of people in work by 2.4 million. In any single year, three million people change jobs and 200,000 men and women who move into new or better-paid jobs see their family income rise by more than £10,000. The tax credit system has been designed to offer support to people as they move between jobs and as their circumstances change.
	Tax credits together with child benefit deliver support to virtually all families with children in the UK. They tackle family poverty, with 700,000 children lifted out of relative poverty since 1998–99 and 1.8 million lifted out of absolute poverty since 1996–97. I commend these regulations and orders to the House.

On Question, Motion agreed to.

Guardian's Allowance Up-rating Order 2006

Lord McKenzie of Luton: My Lords, I beg to move.
	Moved, That the draft order laid before the House on 13 February be approved [19th Report from the Joint Committee].—(Lord McKenzie of Luton.)

On Question, Motion agreed to.

Tax Credits Up-rating Regulations 2006

Lord McKenzie of Luton: My Lords, I beg to move.
	Moved, That the draft regulations laid before the House on 13 February be approved [19th Report from the Joint Committee].—(Lord McKenzie of Luton.)

On Question, Motion agreed to.

Child Benefit (Rates) Regulations 2006

Lord McKenzie of Luton: My Lords, I beg to move.
	Moved, That the draft regulations laid before the House on 13 February be approved [19th Report from the Joint Committee].—(Lord McKenzie of Luton.)

On Question, Motion agreed to.

Special Health Authorities (Audit) Order 2006

Lord McKenzie of Luton: rose to move, That the draft order laid before the House on 13 February be approved [19th Report from the Joint Committee].

Lord McKenzie of Luton: My Lords, the order was laid on 13 February. It is being made under the Government Resources and Accounts Act 2000 and is intended to make the Comptroller and Auditor-General the statutory auditor of four new special health authorities. In conjunction with an accompanying negative resolution order, laid on 8 February, the order will ease the audit burden on these special health authorities and the Department of Health, while maintaining full parliamentary accountability. I am grateful for the assistance we received from the Department of Health and the National Audit Office throughout the process of preparing these orders.
	It may be helpful if I first explain that this is the third time that we have taken such orders through Parliament since 2003. Noble Lords will be pleased to hear, however, that this is likely to be the last, because the Health Bill, currently going through Parliament, includes provision to amend the National Health Service Act 1977 so that in future all special health authorities will be statutorily audited by the Comptroller and Auditor-General without the requirement to take an instrument through Parliament using powers available in the Government Resources and Accounts Act 2000.
	The timetable of the Health Bill is such that we need this order to cover the audit of the special health authorities for the current financial year. We cannot wait until the deliberations on the Health Bill have been completed and it is necessary to take this instrument through Parliament in this financial year. If we fail to do that, four special health authorities will be subject to the administratively expensive dual audit regime process, under the National Health Service Act 1977.
	I turn to the order itself. The Special Health Authorities (Audit) Order 2006 deals with the audit of four newly established Special Heath Authorities and has been prepared in consultation with the Department of Health. The Special Health Authorities are the Health and Social Care Information Centre, NHS Blood and Transplant, the NHS Business Services Authority, and the NHS Institute for Innovation and Improvement. The Special Health Authorities were set up during the current financial year following the Department of Health's review of its arm's-length bodies, the conclusions of which were announced in July 2004.
	The Government are giving the Comptroller and Auditor General statutory audit authority to audit the Special Health Authorities and are removing the requirements for two sets of accounts to be prepared for each—one by the authority and the other by the Department of Health—and for each authority to be, in effect, audited twice—once by auditors appointed by the Audit Commission and again by the Comptroller and Auditor General.
	The order will put the new Special Health Authorities on a par with all the others. The Comptroller and Auditor General will be the statutory auditor in place of the Audit Commission and thus the dual audit burden will be avoided. The companion negative resolution order will mean that the Department of Health need not prepare summarised accounts for three of the four new Special Health Authorities.
	The audit arrangements for these new Special Health Authorities are proposed to take effect from this financial year. The individual Special Health Authorities' accounts will of course be laid before Parliament. The proposals continue the Government's commitment to improve parliamentary accountability. I beg to move.
	Moved, That the draft order laid before the House on 13 February be approved [19th Report from the Joint Committee].—(Lord McKenzie of Luton.)

Baroness Noakes: My Lords, I thank the Minister for introducing the order, which we support. We support the elimination of the doubling up of audits; we support the Health Bill in introducing changes to avoid the necessity to deal with these orders in future; and we also support the greater accountability that comes from the direct laying of accounts of Special Health Authorities before Parliament. I think that that applies, in particular, to the NHS Business Services Authority, which is a somewhat ambitious project to put together a number of disparate elements of the NHS. The scope for failure there is probably quite large and it is probably right that Parliament can keep a close eye on it.
	I have just a couple of questions for the Minister on the financial impact of the order. The regulatory impact assessment refers to a cost saving for the Department of Health of £1,800. Is that a cost saving for all the bodies covered by the order or for each of them? Either way, it is not a lot of money and it has probably been eaten up already by the costs of preparing this order and carrying out all the consultation to which the Minister referred when he introduced the order.
	The Treasury carried out a survey in 2005 on Special Health Authorities having shifted to the new regime. It reported that they now have to resource more lengthy audit inquiries and the publication and laying of accounts before Parliament. Curiously, the regulatory impact assessment concludes that there has been no overall increase in the costs for Special Health Authorities. That cannot be true because it has been identified that they have additional costs for lengthy audit inquiries and for preparing and laying accounts.
	Furthermore, when the first of these orders appeared, the then Financial Secretary told another place that there was a cost saving in the region of a few thousand pounds per body. Did the Financial Secretary get it wrong? Will the Minister clarify the position on costs?

Lord Oakeshott of Seagrove Bay: My Lords, from these Benches I make it clear that we support the order. As we have given the noble Lord a rather hard time on previous orders and he has had to defend policies for which he has not been responsible, I take this opportunity to wish him a pleasant and restful weekend.

Lord McKenzie of Luton: My Lords, I thank the noble Baroness and the noble Lord for their support for the order. In the circumstances, that is very welcome. I was asked two questions relating to costs and burdens. The regulatory impact assessment has confirmed that there has been no increase in the audit burden on the Special Health Authorities affected since the policy was changed in 2003. However, there has been a saving of £1,800 per annum to the Department of Health through not needing to prepare summarised accounts for those bodies. I understand that is a total saving per annum. The transfer of audit responsibility to the C&AG has not adversely affected the aggregate level of audit fees charged to those bodies.
	There was a further question about what had happened as a result of the 2003 transfers.

Baroness Noakes: My Lords, the Secretary of State told the other place that in 2003 there would be a saving per body in the order of several thousands of pounds. I was asking what happened to that.

Lord McKenzie of Luton: My Lords, I can only reiterate what is before me as regards the impact assessment. That is the basis on which these savings should be judged. If there are no further points, perhaps I may put the order into context. In 2003, the Government made orders in support of their objective of reducing the audit burden while maintaining parliamentary accountability for Special Health Authorities and the Department of Health. As has been acknowledged, the Comptroller and Auditor General was appointed auditor of some 19 Special Health Authorities ensuring that the audited accounts of each body would be laid before Parliament annually, together with the C&AG report on those accounts. There would no longer be a requirement for the Department of Health to prepare summarised accounts for Special Health Authorities, except in a few cases.
	The Department of Health's review of its arm's-length bodies now means that there will be 17 Special Health Authorities preparing accounts. Of these, 13 will be included in the Department of Health's resource accounts and four will not. Therefore, the department will need to prepare only summarised accounts for four Special Health Authorities. The Health Bill presently making its way through Parliament will regularise the position so that there will be no need to take such orders through Parliament every time a new Special Health Authority is created.
	In conclusion, the order debated today will result in clear and continuing net benefits in terms of simplifying the auditing framework, reduced audit burdens and the maintenance of accountability to Parliament for the Special Health Authorities themselves and the Department of Health. I commend the order to the House.

On Question, Motion agreed to.

Serious Organised Crime and Police Act 2005 (Application and Modification of Certain Enactments to Designated Staff of SOCA) Order 2006

Lord Bassam of Brighton: rose to move, That the draft order laid before the House on 28 February be approved [20th Report from the Joint Committee].

Lord Bassam of Brighton: My Lords, organised crime is one of the biggest challenges faced by law enforcement in this country or, more precisely, by everyone in the country, because everyone pays the cost. Some pay directly, with their health and livelihoods harmed, and others pay indirectly, through increased costs for goods and services to cover the costs of fraud, or through their tax bills.
	As noble Lords will know, in the White Paper One Step Ahead, the Government made a commitment to create a new agency, the Serious Organised Crime Agency, to counter these threats. The new agency brings together staff from the former Customs and Excise, the National Crime Squad, the National Criminal Intelligence Service, and the UK Immigration Service. The Serious Organised Crime and Police Act 2005 established SOCA, which will assume its functions on 1 April.
	That Act specifies in Section 43 that the director-general may designate SOCA staff with powers, so long as they are capable, adequately trained and suitable to apply them. He may designate staff as people having one or more of the powers of a constable, the customs power of an officer of Revenue and Customs, and the powers of an immigration officer. Initially, SOCA will designate officers only with the powers that they have been operating in their precursor agency. So a SOCA officer who was a police officer with the National Crime Squad will be designated only with the powers of a constable. Over time, as people are trained in other powers, they will be designated with other powers.
	When using their designated powers, SOCA staff members rely on other pieces of legislation, such as the Police and Criminal Evidence Act. In many cases, those other pieces of legislation are framed in a way that means that they can be used by a SOCA staff member with the necessary designation, but, in some cases, there are features of those other pieces of legislation that need technical amendment before they can be applied by a SOCA officer, as set out in the Serious Organised Crime and Police Act. Section 52 of the Act provides that such amendments may be made through secondary legislation.
	The statutory instrument being considered today does exactly that; it uses the power in Section 52 to amend a small number of enactments so that the powers that they confer can be operated by SOCA officers. The Acts that it amends are the Immigration Act 1971, the Police and Criminal Evidence Act 1984, the Immigration and Asylum Act 1999 and the Anti-social Behaviour Act 2003. No amendments are needed to the Customs and Excise Management Act, because the powers that it provides can be operated by a designated SOCA officer without any amendment.
	In accordance with Section 52(6), the Secretary of State has consulted Scottish Ministers, who have indicated that they are content. I commend the draft order to the House. I beg to move.
	Moved, That the draft order laid before the House on 28 February be approved [20th Report from the Joint Committee].—(Lord Bassam of Brighton.)

Baroness Anelay of St Johns: My Lords, I am grateful to the Minister for setting out briefly what the order does. Of course we support the making of the order. Naturally, it is of great importance that we should tackle effectively serious organised crime in the United Kingdom. That is why we supported the creation of the agency in the first place and agreed to the Bill, now an Act, having an expedited process in the wash-up period before the last general election.
	We agree with the Minister that serious organised crime is a blight on the lives of so many people in our society, both economically and socially. The direct economic damage attributed to serious organised crime is estimated to be at least £20 billion per year. It makes up a significant proportion—probably more than half—of the total amount of crime committed in this country.
	The agency should be in a unique position, as its officers will not be police officers, Revenue and Customs officers or immigration officers, apart from a small number of secondees, but they will be able to exercise the same powers. On Second Reading of the Bill that created the agency, we expressed concern that civilians would be given police, customs and immigration powers. We then sought clarification on the checks that would exist in the legislation to ensure that civilians empowered in that way are given adequate training. All checks to ensure that they receive appropriate training and are capable and suitable to exercise the powers are important. The order enshrines the principle that civilian staff may be given those powers. That has been agreed and we do not question it.
	We raised some matters about the detail of the impact of the order in another place, and I would be grateful for the Government's response to those. For example, how many employees are likely to be affected by the order? I understand that, potentially, there will be 4,000 employees in the agency. So how many are we talking about? Which duties would they not be able to do were it not for this order? It would be helpful to the House to be given a flavour of the powers that will be exercised.
	Can the Minister give me further assurance about the measures, which I hope are already under way, to ensure that the checks and balances, to which I referred with regard to training and other matters, will be applied to civilians who are designated with powers under the order? Of course we must know that the powers that we usually entrust to professionals, such as customs officers, are exercised with due care and discretion. I support the making of the order.

Lord Dholakia: My Lords, we on this side support the making of the order. As the noble Baroness, Lady Anelay, has pointed out, it is about the Serious Organised Crime Agency, which comes into existence on 1 April. We are told that the director-general may designate SOCA staff with powers. The qualifications identified are that they should be capable, adequately trained and suitable to apply for them. We have no problems with that.
	We need to be clear about what constitutes serious organised crime. I do not in any way underestimate the impact that serious crime has on the population in this country. We certainly do not disapprove of the tidying-up measures requested by the Minister. However, I am concerned about the fact that the anti-social behaviour order falls within the provision of Section 52 of the Act. That does not seem to me to relate to serious organised crime. I agree with the inclusion of drug trafficking and human trafficking, but we need an explanation of how ASBOs relate to this order. There is need for absolute clarity about SOCA, ASBOs and local police. We should not give powers to SOCA that in essence relate to matters for the local police. It would be helpful to have the Minister's explanation on that.

Lord Bassam of Brighton: My Lords, I am most grateful to the noble Baroness and the noble Lord for their general support for the agency in its aims and objectives. I remember the debates that took place, and it is quite proper that we should focus concern on how the agency will operate and on the powers that the staff working for the agency will be able to exercise.
	The noble Baroness, Lady Anelay, asked how many employees will be affected by the bringing together of the different skills within SOCA. My understanding is that roughly 4,200 staff will be brought together in SOCA. Those staff will be those designated with the powers that she described. About 1,000 officers will be designated with the powers of a constable; about 700 will be designated with the powers of customs officers; and 75 will be designated with the powers of immigration officers.
	The powers of SOCA officers will of course be similar to those of police officers, but, in practice, SOCA officers will not use or need the full range of powers available to police officers. In particular, SOCA officers will not exercise powers that can be exercised only by a constable in uniform. I am sure that the noble Baroness is familiar with those expressions in legislation. SOCA officers will have powers of arrest, but SOCA itself will not have its own detention facilities. A person arrested by a SOCA officer must be taken to a police station to be processed there by a proper custody officer, a process with which I am sure the noble Baroness will be familiar—

Noble Lords: Oh!

Lord Bassam of Brighton: Not, my Lords, in a personal capacity, but from her time on the Bench. That is what I was thinking of. Actually, I sometimes think that we should go through the process ourselves just to understand it better. But I was just thinking aloud.
	The amendment will allow officers to use search powers under the Police and Criminal Evidence Act. The noble Lord, Lord Dholakia, asked about anti-social behaviour orders. It is not envisaged that SOCA officers will issue ASBOs. The amendment is simply to enable SOCA officers to use powers to act to close premises such as crack houses, a campaign whose import has been shared across all political parties in recent times.
	To conclude, of course I am happy to confirm that the checks and balances that we agree need to be imposed will be properly adhered to and available. This is an important piece of legislation that brings together officers with particular skills and talents. It will enable them to focus on serious and organised crime in a way that we have not been able to master before. I am very grateful to both Opposition Front Benches for their support. I commend the order.

On Question, Motion agreed to.

Community Order (Review by Specified Courts in Liverpool and Salford) Order 2006

Lord Bassam of Brighton: rose to move, That the draft order laid before the House on 19 January be approved [22nd Report from the Merits Committee and 16th Report from the Joint Committee].

Lord Bassam of Brighton: My Lords, a draft of the order was laid before Parliament on 19 January, and approved by a Commons Standing Committee on Delegated Legislation on 2 March.
	Section 178 of the Criminal Justice Act 2003 provides the power for the court periodically to review community orders. The order will enact that section exclusively for the north Liverpool community justice centre and the Salford community justice initiative.
	The order is subject to affirmative resolution by virtue of Section 330(5) of the Criminal Justice Act 2003. The power of the court to periodically review community orders is consistent with the provisions in force under the Criminal Justice Act 2003 for the review under Section 210 for drug rehabilitation requirements and Section 192 for suspended sentence orders.
	As noble Lords will be aware, north Liverpool and Salford are the two current initiatives under the Government's community justice programme. The community justice centre in north Liverpool houses a multi-jurisdictional courtroom alongside on-site services such as victim support and citizens advice bureaux. The centre combines punishment with help, dealing robustly and speedily with offenders while addressing the underlying causes of offending. It is responsive to local needs and concerns, and provides a range of services to the wider community. The Salford community justice initiative tests the approach pioneered at the north Liverpool community justice centre with a mainstream magistrates' court environment.
	One of the key elements of the community justice concept is strong judicial leadership and overview. We believe that enabling the community justice courts to oversee progress on community orders will be a valuable tool to develop the success of community justice further. In Liverpool, His Honour Justice Fletcher already exercises this overview on a non-statutory basis. A recent case illustrates the benefits that can accrue for this approach. After sentencing an offender to Her Majesty's Prison Liverpool, Judge Fletcher wrote personally to him, offering support from the community justice centre's various in-house services. This offer was duly accepted and, on release, the individual has benefited from a package of support provided by the Liverpool Housing Trust, by drug intervention programmes and by a volunteer community mentor, to assist his successful resettlement in the local community. We believe that extending this approach to community orders will help to ensure higher rates of compliance and, in the longer term, a reduction in reoffending.
	Implementation of the order for the community justice projects will be evaluated to help to inform decisions on whether it would be beneficial to allow periodic reviews of community orders to be implemented more widely. The order will enable a judge at the north Liverpool community justice centre and magistrates sitting in the community justice court in Salford magistrates' court to review cases after a community order has been imposed. Schedule 2 of the order empowers the specified courts to provide for a court review either when a community order is being made and/or when amending a community order to include or remove a provision for review. A community order providing for review may provide for the community order to be reviewed periodically at particular intervals, require the offender to attend each review hearing and/or provide for a report on the offender's progress in complying with the order to be made available to the court before each review.
	The benefits of the order include the ability to support and monitor offenders during sentence and help to prevent reoffending, and to reassess the effectiveness of the community order and vary it if required. It can also refer the offender to other services where appropriate. Drug services and housing advice, for example, are provided on site at the north Liverpool community justice centre. It also provides offenders with enhanced opportunities to comply with their community order and to amend the order at particular review hearings.
	I believe that the continued interest of the judge or magistrates will have a very positive effect on offenders, some of whom may never have experienced someone in their life taking such an interest in their activities and overall well-being. Furthermore, the order encourages accountability on behalf of the offender, which we think will help to achieve greater levels of compliance. It also sends out a message to the community that community orders are not a soft option, as the judiciary will strictly scrutinise each review and place the onus of compliance on the offender.
	To conclude, giving these powers to north Liverpool and Salford will enable us to test their capabilities rigorously and to develop systems to manage them, which will be of long-term benefit to all criminal courts in the future. The provisions of the order have no impact on the rights set out in the European Convention on Human Rights. I beg to move.
	Moved, That the draft order laid before the House on 19 January be approved [22nd Report from the Merits Committee and 16th Report from the Joint Committee].—(Lord Bassam of Brighton.)

Baroness Anelay of St Johns: My Lords, I thank the noble Lord for explaining the proposals in the order. We supported the proposals in the Criminal Justice Act 2003 to give powers to the courts to review community orders periodically. I therefore support the making of the order today. I note that the 22nd report of the Merits Committee drew the House's special attention to the order on the ground that the pilot schemes give rise to issues of public policy that are likely to be of interest to the House. One might say that, on a quiet Friday afternoon, its expectation has not quite been fulfilled. If it were in order for me to refer to the impressive number of advisers clustered at the end of the Chamber to assist the Minister, one might say that they almost equal the number of Members of this House present in the Chamber. But there we are. The Minister says that he is expecting a barrage of questions. For once I am going to disappoint him. However, there is a chance that, next week, I will come back and have another go. He is going to have a quiet time today.
	The objective of the scheme is welcome. It should promote a closer connection between the offender and the court to assist rehabilitation. It is hoped that the court administration should also benefit from an ability to plan attendances rather than have to cope with the present system of attendances at short notice, if the offender is found to be in breach of an order.
	My honourable friend Mr Jonathan Djanogly has asked the Government questions about the cost effectiveness of the scheme. In response, the Minister stated that a cost/benefit analysis will be carried out and that the results will be available in two to three months' time. The Minister also gave an assurance that a separate qualitative evaluation is being conducted which will examine matters such as the impact on victims and witnesses as well as on the community as a whole. I understand that the results for Liverpool will be available in December and the results for Salford in early 2007. Will the Minister confirm that it is his understanding that those target times will be met? Will he advise his noble friends in the usual channels that it would be right to make parliamentary time available to enable this House to scrutinise the results of the evaluation process? Perhaps at that stage we can bear out the expectation of the Merits Committee that there will be an interest in this House in this matter.

Lord Dholakia: My Lords, I shall also avoid the temptation to put too many questions to the Minister. We welcome the measures in this order, particularly the power under Section 178 of the Criminal Justice Act 2003 and the concept of community justice centres. The order deals with two courts only. What plans are there to extend that? Surely, if the evaluation justifies such action, there should be a universal application across the country. That approach would also facilitate the case of an individual if he or she moved to a location other than Liverpool or Salford. I trust that adequate resources are available if the Government wish to extend such community justice centres.

Lord Bassam of Brighton: My Lords, again, I am very grateful to the noble Baroness and the noble Lord for their support for these arrangements which we can describe—perhaps in the same breath—as innovative and pragmatic. I am very much looking forward to reading the evaluation of the pilot projects. My understanding is that the evaluations being conducted by independent research companies are on track to deliver at the times to which the noble Baroness referred. She makes a proper and fair point about the need to provide parliamentary time to ensure that we can discuss those evaluation reports and have a close look at whether the pilots have delivered in terms of cost/benefit. They both need to demonstrate that.
	This is a new approach. When I was briefed on the order I was extremely impressed by the professional approach that has been adopted in processing the pilots. One can be optimistic about their likely success. I hope so, because the reliance and development of community orders and the way in which this is projected to work could be very useful in providing pointers for this part of the criminal justice system.

On Question, Motion agreed to.

International Organisations (Immunities and Privileges) Miscellaneous Provisions Order 2006

Baroness Royall of Blaisdon: rose to move, That the draft order laid before the House on 6 March be approved [21st Report from the Joint Committee].

Baroness Royall of Blaisdon: My Lords, the order was laid before the House on 6 March 2006 together with the Explanatory Memorandum now required for all affirmative statutory instruments. The draft order amends 10 orders made under the International Organisations Act 1968 by substituting "spouse or civil partner" for "spouse". These orders confer privileges and immunities on international organisations, which are all based outside the United Kingdom.
	The Civil Partnership Act 2004 (International Immunities and Privileges, Companies and Adoption) Order 2005—SI 2005/3542—amended Sections 1 and 2 of the International Organisations Act to enable the United Kingdom to confer privileges and immunities on a civil partner. The Civil Partnership Act 2004, which came into force on 5 December 2005, provides a framework that allows formal recognition of same-sex relationships. Civil partners now have legally binding rights and responsibilities in relation to each other and have acquired a new status which affects how they are treated by third parties, including the state. One of the main aims of the Civil Partnership Act 2004 is to ensure parity of treatment between married couples and civil partners, except where there is an objective justification for a difference in treatment. The amendments made in this order are required to ensure parity of treatment is accorded to civil partners. I am satisfied that the order is compatible with the rights contained in the European Convention on Human Rights. The order is important, but I trust non-controversial. I hope that it will receive the support of noble Lords. I beg to move.
	Moved, that the order laid before the House on 6 March be approved [21st Report from the Joint Committee].—(Baroness Royall of Blaisdon.)

Baroness Noakes: My Lords, I thank the Minister for introducing this order which we are pleased to support. We support the Civil Partnership Act and hence we support orders such as this which fill out the outer edges of the framework of civil partnership. There have been rather a lot of orders dealing with civil partnerships since the Bill was passed. After several batches, I asked the noble Lord, Lord Evans of Temple Guiting, how many more were to come. On 27 October 2005 he wrote to me with quite a long list of orders still in the pipeline. This order was not on the list. The noble Lord wisely covered his position by saying that he could not give a,
	"cast iron guarantee that there have been no omissions".
	It is clearly just as well that he registered that proviso. So I shall ask my question again: will the Minister say how many more civil partnership orders we are going to get, whether subject to the affirmative or the negative procedure? That will give us a fix on how much more there is to do. We should like to declare this job well and truly over.
	Turning to the specific order, we welcome the extension of the relevant immunities and privileges to civil partners. That is clearly right. But will the Minister explain the position in relation to the civil partners of diplomats and others from this country who go overseas? How many countries give an equivalent recognition to the civil partners of those from this country who go overseas? I rather anticipate that not many countries will have got that far yet, and therefore perhaps I may invite the Minister to tell us what the Government are doing to ensure that other countries afford the civil partners of people from our country similar rights and privileges when they go overseas on Her Majesty's business.

Lord Wallace of Saltaire: My Lords, I come at this from a rather different angle from that of civil partnerships. As the Minister will recall, Members on these Benches have some doubts about the continued extension of diplomatic privileges because the world is changing and the extension of privileges in open, democratic societies is something one has to watch. However, in this case we welcome such an entirely justifiable proposal.
	Perhaps I may put one or two questions to the Minister. Is this an inclusive list of international organisations? I was not entirely clear whether it was. Does it also apply to the relevant diplomatic privileges and immunities of people associated with European organisations and agencies, or will there be a separate order for that? How does it apply to diplomats in bilateral embassies in the United Kingdom to which this does not refer? Perhaps I have missed the order that extended these rights to civil partners in the embassies of third countries.

Baroness Royall of Blaisdon: My Lords, I am grateful for the support of the Benches opposite. I am sure that the Government also look forward to the end of the bringing forward of orders to ensure that this legislation is properly implemented. At the moment, I cannot give the cast-iron guarantee requested by the noble Baroness, but I know that there are no more orders in the pipeline in relation to privileges and immunities. I shall seek to clarify the position and write to her.
	As to UK citizens living outside the UK who belong to other organisations, the UK naturally welcomes compliance by other European Union member states. Ultimately, however, it is a matter for each member state to decide, depending on the policy choices available to it. We urge other member states to travel in a similar direction, but it is entirely up to them. The UK recognises overseas relationships that are akin to UK civil partnerships and we would welcome similar treatment from other countries.
	The noble Lord, Lord Wallace, asked whether the order should apply to people working in European Union institutions. I can say that there is no need to extend this measure to diplomats in bilateral embassies in the UK as their civil partners are already covered because they are members of a family. I do not, I am afraid, have the answer on whether people working for European institutions are or will be covered by the order. However, I shall write to the noble Lord, with a copy to the noble Baroness, and place a copy in the Library. I am very grateful for the support of the Benches opposite.

On Question, Motion agreed to.

Employment Zones (Allocation to Contractors) Pilot Regulations 2006

Lord Hunt of Kings Heath: rose to move, That the draft regulations laid before the House on 15 February be approved [19th Report from the Joint Committee].

Lord Hunt of Kings Heath: My Lords, since coming to power in 1997 the Government have promoted employment by providing a stable economic environment in which we have witnessed large numbers of people move into employment. Despite this, there remain those who have failed to move out of poverty and into long-term, sustained jobs.
	In April 2000, we met our manifesto commitment by establishing employment zones in those parts of the country where long-term unemployment was a particularly persistent and distressing problem. Employment zones provide an environment where innovation can flourish and where our public and private voluntary sector providers can work imaginatively to provide tailored solutions to meet jobseekers' needs.
	In 2004, in the larger employment zones, we introduced pilot arrangements to explore whether introducing a range of different providers operating the programme within the same employment zone area would be beneficial to jobseekers. These new regulations use the power contained within Section 29 of the Jobseekers Act 1995 that permits us to pilot changes, including selecting participants on a sampling basis to test whether pilot proposals are likely to help people obtain work. Section 29 enables regulations to be made to pilot changes with a view to establishing if they will work, but limits the duration of such regulations to 12 months. At the end of this period, if appropriate, the regulations may be replaced by similar provision for a further 12 months.
	My noble friend Lady Hollis introduced these pilot arrangements to this House in 2004. Last year, my noble friend Lady Andrews introduced arrangements before this House to continue the pilot through the Employment Zones (Allocation to Contractors) Pilot Regulations 2005, which expire on 24 April 2006. My noble friend said at the time that it might be necessary to introduce further regulations in 12 months' time to enable analysis of the pilot to be completed. Evaluation of the pilot is not yet complete, and the regulations will enable the pilot to continue for a further 12 months.
	This pilot has been operating for almost two years; we intend to publish an evaluation report at the end of 2006 which will provide detailed findings from our analysis of the pilots. This report will provide the first comprehensive view of the performance of these multi-provider employment zones and will help us determine the future direction that should be taken in this important area of government policy.
	These regulations make similar provisions to the 2005 pilot regulations that the House approved last year. Our experiences of operating the programme over the past year have resulted in a few minor amendments to improve the operation of the programme.
	The employment zone programme is focused on our jobseekers who have been out of employment for some considerable time. I appreciate that it is sometimes difficult for those who have spent a long time away from work to understand the value of the personalised help that is available in these employment zones. These regulations, therefore, make it mandatory for eligible jobseekers to participate in the programmes to which they are referred, but they do not impose additional demands on people in those pilot locations, compared with other employment zones.
	Employment zone participants are subject to a similar sanctions regime as applies to other jobseekers taking part in mandatory employment programmes such as New Deal. Jobseekers who are unwilling to avail themselves of the opportunity to participate in the programme may incur sanctions upon their jobseeker's allowance. Our experience of operating the programme for some time indicates that the number of jobseekers who choose not to engage in the programme is similar to the national JSA sanction rate.
	These regulations will apply in the same geographical area where the current pilot scheme operates. In addition, with the closure of the working neighbourhood pilot next month, certain areas in Glasgow, Birmingham and Tower Hamlets, which are currently working neighbourhood pilot areas, will be included in the employment zone areas.
	The legislation continues the existing pilot scheme provisions which allow those jobseekers whose personal circumstances place them at a significant disadvantage in finding employment to volunteer to participate in the employment zone at a time earlier than that which would usually be allowed. This is an important opportunity for those whose needs are the greatest and ensures that they receive the help they require at an early stage.
	I am satisfied that allocating customers to the providers in this way is compatible with the European Convention on Human Rights. We have consulted the Social Security Advisory Committee regarding these draft regulations; the committee advised that it did not wish to have the proposed regulations formally referred. I commend the regulations to the House and beg to move.
	Moved, That the draft regulations laid before the House on 15 February be approved [19th Report from the Joint Committee].—(Lord Hunt of Kings Heath.)

Baroness Noakes: My Lords, I thank the Minister for introducing the regulations. We have no problems with them, since they extend the experiment of employment zones and we obviously support the development of schemes which have a realistic chance of achieving the return to employment of those whose chances are otherwise limited.
	Can the Minister assure the House that this extension of 12 months will be the last extension, and that before we reach this time next year, the Government will have completed their analysis of the employment zone scheme and presumably decided either to roll it out further or abandon it, as dictated by the evidence? We are firmly in favour of experiments, but not ones that go on for ever. If there is good news in the scheme, then others should reap the benefit. If it is not positively evaluated, there is no point in continuing.
	My main area for questioning concerns the link between the employment zone programme and the DWP's Gershon efficiency programme. As I understand it, Jobcentre Plus is due to deliver a reduction of 15,000 full-time equivalents in the period to 31 March 2008. It is already well publicised that this programme has run into problems. The report of the Select Committee on Work and Pensions in another place only last week sets that out.
	At the heart of the employment zone experiment is the use of contractors to deliver programmes. Presumably, when contractors are used, the need for those employed in Jobcentre Plus will go down, but the cost will not go down—it may even go up. How does the department score this in calculating its Gershon efficiency gains?
	The Minister will be aware that the National Audit Office's report on the Gershon savings published last month noted that the DWP needed more information on the numbers of agency staff and contractors employed, with the very clear message that they were being ignored in the calculation of Gershon efficiencies. That cannot be right. Will the Minister assure us that false efficiency gains are not being scored as far as the employment zone contractors are concerned?
	Will the Minister also comment on how the employment zones are funded? To put it another way, how do the contracts with the contractors actually work? It has been suggested to us that successful contractors have had their programmes curtailed if the Jobcentre Plus budget for them has run out—the very opposite of the desired result is achieved. How does the funding work? Will the Minister reassure the House that success is rewarded and not penalised?

Lord Oakeshott of Seagrove Bay: My Lords, I am happy to confirm that all three major political parties support these employment zones. I have just two questions. In the Commons, the Minister said that the monitoring of the results of these pilots was well advanced. Will the Minister share some of the preliminary findings with us?
	On the complicated details of splitting wards and of some postcodes being included and others not in the selection of these areas, the Minister in the Commons said that she had no idea why there were endless lists of postcodes. I will take Birmingham as an example—a city with which both the Minister and I are reasonably familiar. I had the opportunity to revisit Washwood Heath at some length last year in the by-election for the first time in 30 years and I can well see why the whole of that ward is included. However, why are some postcodes in Sparkbrook included and not others? In particular, no doubt the Minister will be able to tell us why some postcodes in Moseley and Kings Heath are included and others not.

Lord Hunt of Kings Heath: My Lords, I thank both the noble Baroness, Lady Noakes, and the noble Lord, Lord Oakeshott, for their general support for the pilots, which is very much appreciated. The noble Baroness, Lady Noakes, asked me whether I could guarantee that I would not come to the House in a year's time—or whoever is fortunate enough to be in this position—to propose new regulations to extend these pilots. I cannot guarantee that, because we are still in the evaluation process. At this stage, it is not possible to say what we intend to do in the future. The beauty of the procedure that we have is that it enables us clearly to develop pilots, learn from them and therefore consider whether we should carry on with slightly different pilots or extend them throughout the country. At this stage, I cannot say what is to be the likely outcome, although I accept that if the process has proven to be successful it is important that we learn the lessons generally.
	We will be publishing some evaluation in August 2006 followed by an end-year report. That will be made available and we will carefully consider the conclusions. It might help the House if I were to say that early indications are generally positive. The providers are working well with these difficult customer groups by using a flexible one-to-one tailored approach. We think that job entry rates are pretty good among the younger groups. Job entry rates are around 50 per cent for New Deal young people—returners after six months of the programme start. Although young people present a challenge in terms of getting them to sustain work, providers suggest that putting in place extra measures to promote sustainability seems to bring about positive outcomes. However, as I said, we will see when the full evaluation reports come out and that will then lead to a decision about whether we extend the scheme, go for more pilots or introduce these more generally throughout the country.
	The noble Baroness, Lady Noakes, asked me about Gershon and various questions around the efficiency of the Department for Work and Pensions. With regard to the Select Committee report on Jobcentre Plus, we shall of course consider the committee's recommendations and respond as we are charged to do so. We believe that the report primarily focuses on a period when we recognise that Jobcentre Plus experienced difficulties, as it implemented a major change programme. Things have improved considerably since then and Jobcentre Plus now routinely answers more than 95 per cent of calls to make benefit claims. We think that those standards compare to those of leading private sector organisations. Of course, we cannot be complacent and we shall continue to monitor and improve the service.
	On the noble Baroness's more general point, she is right to suggest that the department is going through a considerable change in its mode of operation and we have plans to reduce the number of staff employed directly by the department. I shall write to her on the specific technicality that she raised, as I am afraid that I do not know the answer to that. But on the general principle, she will notice that in the Budget settlement my department will undertake in the next spending round a 5 per cent real terms cut per year in our resources. So clearly the focus of the department is on a wholesale re-engineering to ensure that we improve our efficiencies to meet the new budgetary envelope that we shall operate in and to deliver a better service to the public.
	The implication of what the noble Baroness said was that some of the lessons learnt in the employment zones by using private contractors may well be valuable in the future re-engineering and restructuring of the department. She will also have noticed that in the Green Paper on welfare reform we referred to the intention to use private and voluntary sector organisations to help us to take forward our welfare reform programme.
	The noble Baroness also asked me about the way in which the private sector contractors were paid. I have lots of details here, which perhaps I can send her, but I make the general point that the private contractors are incentivised to be successful, so the more successful they are in getting people into work for a sustained period, the more money they get; the quicker they get people into work for a sustained period, the more profit they are likely to make. As I say, I shall happily write to her with further details.
	I was very surprised at the noble Baroness's suggestion that the payments system works in a different way. If she has evidence of that I am happy to look into it, but my understanding is that the payments system is expressly designed to incentivise the private contractor to do well. Because of the random selection of people going into each of the companies, there is no opportunity for cherry-picking. That, again, is very valuable information for the future.
	The noble Lord, Lord Oakeshott, referred to the question of postcodes and electoral ward boundaries. My answer to his question why we use postal codes instead of electoral ward boundaries is, "Why not?". The official answer that I have been given is that in essence, whichever system you use, changes occur, so there is no perfect way in which to set the designated areas. I know that postcode changes take place; if they take place within the designated employment zones, either we can bring new regulations in to regularise that—because it could have the effect of taking a customer out of an employment zone—or the customer could continue on a voluntary basis, even if the postcode had been changed. Whichever mechanism we use, we have sufficient flexibility.
	I am tempted to refer the noble Lord to the regulations and to the Birmingham employment zone. He mentioned Washwood Heath; my own ward of Moseley and Kings Heath is here, but not my own postcode, so if a reshuffle takes me away I am afraid that it will not be open to me to take advantage. But I welcome further discussion with the noble Lord on these extremely important considerations in the life of Birmingham.

On Motion, Question agreed to.

Occupational Pension Schemes (Levies) (Amendment) Regulations 2006

Lord Hunt of Kings Heath: rose to move, That the draft regulations laid before the House on 15 February be approved [19th Report from the Joint Committee].

Lord Hunt of Kings Heath: My Lords, this statutory instrument sets the rate for the administration levy for the Pension Protection Fund for the financial year 2006–07. It also provides that there will be no levy for 2006–07 for the Pension Protection Fund ombudsman. The Government have a commitment to ensure that members of defined benefit occupational pension schemes can be confident that they will still get a protected level of income in retirement if their employer unfortunately becomes insolvent and the scheme is underfunded. The Pension Protection Fund, which opened its doors on 6 April 2005, forms a key part of meeting this commitment and, to date, more than 25,000 members of around 53 schemes are in an assessment period to establish whether they will enter the PPF.
	While it is right and necessary to protect those benefits, it is not right that taxpayers should foot the bill. As such, the PPF is financed through levies on schemes that are eligible for PPF assistance. The pension protection levy, together with the assets of schemes that are transferred in, provides for the compensation fund itself, but it is important that this money is ring-fenced for the payment of compensation. There must always be funds in place to meet the compensation awards made by the PPF. In light of that, the Pensions Act 2004 sets up a separate administration levy that is raised to meet the ongoing running costs and the initial set-up costs of the board of the PPF. The set-up costs of the PPF were originally financed by money provided for by Parliament, and these are being recovered over a three-year period.
	The PPF legislation also provides for a disputes process so that interested parties can ask for a review of a range of key decisions by the board where appropriate. These are described as "reviewable matters" and are set out in Schedule 9 to the Act. There is also a right of complaint about alleged maladministration by the board. There is a two-stage internal process within the PPF for people to have such cases reviewed and reconsidered. However, if people are still dissatisfied, they can refer the case to the independent and newly established PPF ombudsman. Information about referring a case to the ombudsman is on the PPF's website, and also has to be given by the PPF to people it notifies of a second stage reconsideration decision. To date, no matters have been raised for internal review, so no matters have been referred to the PPF ombudsman.
	The Secretary of State initially funds the PPF ombudsman's work from money provided by Parliament. A levy can be raised to recover this expenditure, but for the financial year 2006–07, as for the financial year 2005–06, no PPF ombudsman levy will be needed. With no cases yet referred, the cost of the ombudsman to date has been very small, and it is not practical to levy such small sums at this time.
	As to the regulations before the House themselves, Regulation 2(2) provides that the PPF ombudsman levy is not payable for the financial year ending on 31 March 2007. It amends Regulation 4(4) of the principal regulations, so that they now read:
	"The PPF Ombudsman levy is not payable in respect of the financial years ending with 31st March 2006 and 31st March 2007".
	I understand that so far no reviewable matters have been raised with the PPF for the internal review process. I also understand that there have so far been no complaints of maladministration against the PPF.
	The PPF administration levy is calculated using a rate per member of a scheme. This is a variable rate, based on the number of scheme members on a scheme's reference day. Regulation 2(3) brings the administration levy reference day into line with that for the pensions regulator's general levy, a year sooner than we had thought feasible. The change is technical, for simplicity.
	The main provision in this instrument is that in Regulation 2(4). It provides that the administration levy amounts payable in the financial year ending 31 March 2007 will be the same as in the financial year ending 31 March 2006.
	Regulations 2(5) to 2(7) make some very technical amendments relating to the pension protection levy. Regulation 2(5) amends the principal regulations to add the pension protection levy to the list of levies covered by the general provisions of those regulations. The addition of the pension protection levy at this "general" regulation is needed so that an exception can be then made in respect of multi-employer schemes in a later regulation, Regulation 2(7). Regulation 2(6) makes a consequential amendment to the principal regulations to take out reference to the pension protection levy there, which is no longer needed. Regulation 2(7) amends the principal regulations to provide that that regulation, which is about multi-employer schemes, does not apply to any pension protection levy. Regulation 2(8) amends the principal regulations to add a reference to the corresponding Northern Ireland provision to the pension protection levy.
	As the pension protection levy is new for 2006–07, it needs to be added to the current list of levies for which such provision is made. This list already includes both the PPF administration levy and the PPF ombudsman levy. These levy regulations clearly impact on business, as they provide the administrative resources that are needed by the PPF. This was considered in the Pensions Act 2004 regulatory impact assessment, which estimated the annual administrative cost of running the PPF to be around £15 million a year. That continues to apply.
	I confirm that I am satisfied that the statutory instrument before us is compatible with the rights in the European human rights convention. I commend it to the House. I beg to move.
	Moved, That the draft regulations laid before the House on 15 February be approved [19th Report from the Joint Committee].—(Lord Hunt of Kings Heath.)

Baroness Noakes: My Lords, I thank the Minister for introducing the regulations. He said that they will raise approximately £15 million or, to put it another way, British business will have to stump up around £15 million in administration costs. This is not the element of the costs of the Pension Protection Fund that will cause the most concern, so I shall not delay the House. However, I wish to put on record that the total costs of the PPF are of concern to British business and there will be a point beyond which the costs of the PPF, whether administrative or otherwise, could start to inflict economic harm. At that point, it will not matter what label the costs have.

Lord Oakeshott of Seagrove Bay: My Lords, I have two comments to make, but no objections to the regulations. First, I take this opportunity—because I think it is the only one that I will have—to pay tribute to the good work of Myra Kinghorn as chief executive of the Pension Protection Fund. I was sad to see that she announced the other day that she has decided to leave that job. She has done a good job setting up the PPF on the basis that was intended by Parliament in our extensive and detailed debates and in the amendments passed against the Government. That has been properly followed and generally, with Lawrence Churchill, she has got a very difficult show on the road. What is the timescale for replacing Myra Kinghorn in that important job? What progress is being made? It is important that a chief executive is in place as soon as possible.
	Secondly, as we have been discussing ombudsmen, who are in the news, we are all interested in their status and significance or, to put it more brutally, whether anyone has to take a blind bit of notice of what they say. Can the Minister remind us the status of the PPF ombudsman if he ever has to give a ruling?

Lord Hunt of Kings Heath: My Lords, I am grateful to both noble Lords for their welcome—their support at least—for the regulations. "Welcome" is going too far. I understand the point raised by the noble Baroness, Lady Noakes. Although I was not privileged to take part in the debate on the primary legislation that led to the establishment of the PPF, the issue was clearly fully discussed. What is the alternative? It is presumably that the Government contribute funding. The noble Baroness will know that we do not consider that taxpayers should support or finance the PPF. Many taxpayers are not members of DB schemes and would therefore never call on the PPF. I understand the pressures on businesses that have pension deficits. We are all aware of them. The way that the PPF is going and the decisions that have been made on the levy understand the pressures, but it is important that we do everything that we can to ensure that pensions funds in general are brought back to a satisfactory, viable position as soon as possible There is clearly a balance to be drawn.
	On the resignation of Myra Kinghorn, I will be happy to pass on the comments of the noble Lord, Lord Oakeshott, to her. I am happy to pay tribute to the work she has done and, indeed, to the chair and board of the PPF. Obviously, the appointment of a chief executive is not a matter for the Government, but for the PPF. My understanding is that the board will be making a statement about that in due course, but I am afraid that I do not have any more information at all. Knowing how the board and chair have conducted themselves, however, I would be surprised if the PPF was not able to make effective interim arrangements as quickly as possible.
	I am not sure the noble Lord, Lord Oakeshott, really wanted me to respond to his final point, so I will not.

On Question, Motion agreed to.

Social Security (Reduced Rates of Class 1 Contributions, Rebates and Minimum Contributions) Order 2006

Lord Hunt of Kings Heath: rose to move, That the draft order laid before the House on 1 March be approved [20th Report from the Joint Committee].

Lord Hunt of Kings Heath: My Lords, the draft order sets out the proposed rates of contracted-out rebates that will apply from April 2007. Before I set out what those rates will be and say why we have decided on our particular approach, it may be helpful to the House if I explained what the rebates are and how the process to review them works.
	When someone contracts out of the state additional pension—the state second pension—the state has a reduced liability and pays less pension in the future. In return, the state pays a rebate. The rebate is delivered through a reduction in national insurance contributions and/or an end-of-year age-related payment to an individual's pension scheme. The Secretary of State has a statutory duty to review the contracting-out rebates at least every five years. This means that rates can be reviewed more often than that if appropriate. To assist the Secretary of State in his review, the Government Actuary is required to report to him on the level of rebate rates. The last full review of the level of rebates was in 2001, for rebates from April 2002.
	The present review began last year. The Government Actuary issued a consultation paper in September 2005 on the actuarial assumptions that he proposed to adopt for his report to the Secretary of State. The Government Actuary gave the responses to that consultation careful consideration before drawing up his final report. His advice to the Secretary of State has been taken into account in the proposals before the House.
	The proposals in the Government Actuary's report reflect his view of the factors affecting the cost of providing benefits of equivalent actuarial value to the state pension forgone as a result of contracting out. These include, for example, the continued low levels of real interest rates, expectations of continued improvement in pensioner longevity and the expenses of private pension provision. The Government Actuary's report and the report by the Secretary of State were laid before the House together with the order on 1 March.
	The Government Actuary's recommendations, if accepted, would result in a significant increase in the cost of rebates from April 2007. We have thought carefully about whether this would be the right thing to do. We are currently in the process of reaching a long-term settlement on pension reform and are considering the Pensions Commission recommendations—I will say more about that in a moment. While we are considering the future of pension policy, it is responsible—and we have decided—to take a cost-neutral approach. A significant increase in expenditure on rebate rates would not be appropriate at this time.
	We have had to weigh up the recommendations of the Government Actuary and the need to consider the future of pension policy. Our proposals, to apply from 2007, are as follows. On salary-related occupational schemes, if an individual is contracted out of the state second pension, the employer and employee currently pay national insurance contributions that are reduced in total by 5.1 per cent of earnings between the lower and upper earnings limit. That will be increased to 5.3 per cent. All of the increase in the flat-rate rebate for salary-related occupational schemes is to go to employers, in recognition of the benefits provided by those schemes.
	For personal pensions and money purchase occupational schemes, we are accepting the Government Actuary's recommendations on increases in the age-related rebates. However, we have decided to reduce the cap from its present level of 10.5 per cent to 7.4 per cent. The cap was introduced in 1997 by the last government to restrain cost on public finances. Reducing the cap to 7.4 per cent will affect those aged 44 and over in personal pension schemes and those aged 48 and over in money purchase occupational schemes. In personal pension schemes, those aged above the level at which the cap bites are likely, other things being equal, to be better off not contracting out of the state scheme. However, in practice, that will of course depend on personal circumstances and expectations about the future. It will be up to individuals to weigh up whether to contract in or out, after taking into account information received from their scheme and, if appropriate, their adviser.
	To achieve a cost-neutral approach, we have had to strike a balance between different types of scheme, and I believe that we have achieved the right balance. The proposed package offers an increase in rebate rates for salary-related occupational schemes without setting too low a cap for money purchase schemes. I emphasise that it is a legal requirement that the rebate rates are reviewed at least every five years. Therefore, the timing of this review is fixed—it is five years since the last review set rates from 2002. The rebate rates can be reviewed again whenever we think it appropriate. A decision on timing will be taken once the way forward on pension reform is clear, but the policy on contracting is an important part of wider pension reform.
	As noble Lords will know, we set up the Pensions Commission in 2002 to examine the UK private pension system and the issue of long-term savings. Adair Turner and his colleagues published the second of their reports at the end of last year, making recommendations about the future shape of pensions. Contracting out is one of the most complex areas of pension policy, as the Pensions Commission recognised when it said that, were it to create a pension system from scratch today, it would not include contracting out. The commission made a number of recommendations in relation to contracting out, in particular that the contracting-out option for defined contribution schemes should be removed and that it should be phased out for defined benefit schemes by 2030. We have welcomed the Pensions Commission's second report as an excellent contribution to the ongoing debate.
	Our work reaches an important stage this spring, when we will bring forward a pensions White Paper setting out the Government's proposals for long-term pension reform. I have no doubt that noble Lords will question me about this, but the decision that we have taken in relation to rebates has to be set fully and squarely in the context of our current deliberations on the Pensions Commission recommendations. I am satisfied that the order is compatible with the European Convention on Human Rights, and I commend it to the House. I beg to move.
	Moved, That the draft order laid before the House on 1 March be approved [20th Report from the Joint Committee].—(Lord Hunt of Kings Heath.)

Baroness Noakes: My Lords, I thank the Minister for introducing the order. I would like to say that we welcome it, but I cannot. This mean-spirited order is unhappily all of a piece with the Government's cavalier approach to pensions in the private sector. The Government have done nothing good for private sector pension provision in the past nine years. They have virtually demolished private sector defined benefit provision, starting with the ACT raid. As pension schemes started to fail, the Government responded at speed to create a new category of preferential debt on company balance sheets via the Pension Protection Fund, which would be better named the government protection fund. The combined weight of funding the PPF and the powers of the new regulator is today threatening the economic viability of some businesses. The pensions tail is in too many cases wagging the wealth-creating dog. At the same time, the Government have been dilatory and mean about the amount of money available to and distributed by the Financial Assistance Scheme.
	The Government have also presided over a collapse in private savings, and this week's Budget has done nothing to reverse that. The Chancellor's bid to make a majority of pensioners dependent on means-tested benefits has produced yet more disincentives to save, and the savings credit has muddied the waters still further. But the Government have gone to great lengths to protect public sector defined benefit provision and, in the case of judicial pensions, they have gone to extraordinary lengths to protect the enhanced benefits of a privileged few.
	It is necessary to paint that background before we move to the narrower territory of today's order. I have always regarded contracting out as one of the more arcane areas of pension provision, and so it is in the detail. But the big picture is that, through contracting out, the Government achieve a transfer of liabilities and risk from public funds to the private sector. In return for that transfer of risk, the Government pay the private sector via a system of national insurance rebates, so it is important that the price for that transfer is right. The Government say that the price for the next five years is to be 5.3 per cent with the reduced caps that the Minister explained, but no one seems to agree with them.
	The Government Actuary has said that the rebate should be 5.8 per cent. The Government's decision to ignore the Government Actuary has been described by the actuaries Mercer as "the stealthiest of taxes"—and we have seen quite a few stealth taxes over the past few years, so that is quite an accolade. Actuaries Watson Wyatt have calculated that the new rebate will put another £1.5 billion of pressure on schemes, and another firm, Hymans Robertson, has calculated that £2 billion will be needed.
	The National Association of Pension Funds has noted that recent changes such as the introduction of the Pension Protection Fund have increased the costs of private pension provision and transferred additional risk from the Government. In that light, the NAPF believes that a fairer rebate level would be around 8 per cent rather than 5.3 per cent. The Association of British Insurers has pointed to the difficulty, which will be exacerbated by the new rebate levels, in advising employees whether to contract out or to remain contracted out. The ABI has particular concerns about the unattractive nature of contracting out for many more people than at present. It believes that contracting out should be a "win-win" for the Government, employers and employees, but it thinks that the new rebate level has destroyed that equation in many cases, especially for older people—"old" in this case being past the age of 43. For many over that age, with these new rebates, contracting out will be the wrong answer.
	The ABI has also challenged the use by the Government Actuary's Department of an equity risk premium in the calculations by the Government Actuary, because the ABI does not believe that it is correct to assume that an employee who contracts out should be more risk-tolerant than the average employee. It believes that actuarial neutrality implies the use of a risk-free discount rate. Indeed, the ABI goes further and suggests that the Government should build in a small premium for contracting out to simplify decision-making for individuals.
	The Government have justified this order, which has the imprint of the Treasury all over it, on the basis of "cost neutrality", whatever that means. It certainly does not mean neutrality for occupational pension schemes. That translates as no short-term cost to the Treasury. This decision about the rebate should not be about protecting the Treasury; it should be about a fair recompense for the transfer of liability and risk.
	The fig leaf for this decision is the Turner review, which is doubtless a convenient way to avoid many awkward questions for a while. But that cannot be more than an excuse, as any changes post-Turner will take a long time to implement and are unlikely to have any impact for the duration of this quinquennial determination of the rebate rates.
	It is difficult to find questions to put to the Minister beyond the overarching "why?". Why are the Government doing this to the contracted-out rebate? Cost-neutrality and fiscal circumstances are weasel words which have nothing to do with the honest operation of the rebate. If we do not get an honest answer today to the "why" question, perhaps the Minister will give an honest answer to a "when" question. We have to wait for the Government's response to the Turner report, which the Minister mentioned. He said the report would be available "this spring"—I think that I have quoted him correctly—but I understand that the phrase used in another place was "late spring". Will the Minister either say precisely when the report will be available or define when spring starts and ends?

Lord Oakeshott of Seagrove Bay: My Lords, it is good to hear the noble Baroness, Lady Noakes, in such fine ending form. By my calculation, she has handled nine orders today from the Conservative Front Bench; I have been a slacker with only eight. I say to the noble Baroness, "We can't go on meeting like this".
	I am sorry to say that we on these Benches cannot welcome the order either. As the Minister indicated, for contracted-out salary-rated schemes the rebate will go from 5.1 to 5.3 per cent. But, in its report to the DWP, the Government Actuary's Department proposed that it should be set at 5.8 per cent. We then had the excuse that in the present fiscal circumstances—I would watch that carefully if I were the Government worrying about what someone is going to say or about inquiries in the future—and given the current consideration of pensions policy, the Secretary of State decided instead, unilaterally, to fix it at 5.3 per cent. The Government are deliberately, and against their own professional advice, setting the rebate at a level below that which the Government Actuary's Department thinks is necessary to give an equivalent benefit to the state pension given up. In these schemes, are the Government not mis-selling contracted-out pensions and does not the inadequate increase in the rebate compound that?
	The Association of British Insurers, to which the noble Baroness, Lady Noakes, referred, has a considerable interest in this matter and I think that its briefing is worth reading out in detail. It is important that noble Lords hear it because it tells us something about the nature of contracted-out rebates and their complexity. It states that,
	"the assumptions made by the Government Actuary, which underpin the rebate levels recommended by him, are not as robust as they should be in order to ensure actuarial neutrality. In calculating the pre-vesting net yield, the Government Actuary allows for an estimate of the Equity Risk Premium (ERP) expected for the period over which the rebates are invested. We strongly believe that the ERP should not be allowed for in calculating the rebate levels. It should not be assumed that the worker who contracts out is more risk tolerant than the average worker.
	In our view, actuarial neutrality implies the use of a risk free discount rate as represented by gilt yields . . . Consequently, rebates should be calculated using yields on gilts of durations which are appropriately matched to the term to State Pension Age".
	Is that quite clear, even at the back of the class? No, I did not think so. It just shows how eye-wateringly complicated that system and contracting-out are. It is a nightmare for ordinary people to decide whether to stay in the state top-up scheme or whether to stay out.
	The only solution is to strip away the current complexity. I say this to the Association of British Insurers as much as to anyone else. Of course, the association is right, as we are, to point out that within the existing system the Government should take proper professional advice. But they, among all people, should also see how hopelessly complicated and how rotten a system it is. As I said, the only solution is to strip away the current complexity surrounding it. Our proposal for a citizen's pension would ensure that a state pension was paid at a level that negated that need. That is also the direction of travel for Adair Turner. The state second pension would be phased out. I ask the noble Lord to pass on to his Secretary of State and to the Prime Minister our full support in their battle royal on pensions with Gordon Brown.

Lord Hunt of Wirral: My Lords, I strongly agree with the points raised by my noble friend Lady Noakes and the noble Lord, Lord Oakeshott. I should like to put three questions to the Minister which arise out of the discussion that we have just had.
	First, I should like to press him further on exactly what is so adverse about the present fiscal circumstances as to convince the Secretary of State not to accept the proposals from the Government Actuary? Secondly, have Ministers really thought through the impact that this decision is likely to have on various forms of pension and how that will link with their response to the Turner commission? Thirdly—the Minister has already referred to this—to what degree does he believe that the forthcoming White Paper might necessitate a further review of rebates?
	On the first point, in his report the Secretary of State states that,
	"in the present fiscal circumstances and given the current consideration of pensions policy outlined in the second paragraph to this report, I do not believe it would be appropriate to accept his recommendation"—
	that is, the recommendation of the Government Actuary. On reducing the cap from 10.5 per cent to 7.4 per cent he states:
	"I have now decided to change this to 7.4 per cent, taking account of fiscal constraints".
	The Secretary of State has decided to pay rebates below the actuarially neutral level to defined benefit schemes and to individuals above the age of 43 in defined contribution schemes. The cap for DC has, therefore, been reduced dramatically. Paying actuarially neutral rebates does not cost the Government money. It simply transfers, as my noble friend pointed out, an unfunded state pension liability to a privately funded one, in which case the only real impact of contracting out is going to be one of cash-flow.
	What exactly is so adverse about the current fiscal circumstances of the National Insurance Fund that the Secretary of State has deemed it necessary to disregard the advice of the Government Actuary and refuse to pay an appropriate rebate to, or on behalf of, potentially millions of individuals? Surely Ministers should have provided a fair deal on contracting out? Contracting out moves individuals from unfunded state pensions to privately funded pensions. This would appear to be in line with the Government's objectives for a number of straightforward reasons. In the light of spiralling unfunded public sector pension liabilities, measures to transfer future liabilities appear to be sensible. This rebate announcement seems to go against that logic.
	For defined contribution schemes, does the Minister accept that the vast majority of those above age 43 are likely to rejoin S2P? In the case of defined benefit schemes, where contracting in would require extensive structural change, does the Minister accept that this announcement may further accelerate the decline of such schemes? Surely the Government should be encouraging, not discouraging, privately funded pensions? Reference has already been made to the Pensions Commission's view that there should be changes to state and private sector pensions and to contracting out.
	On state pensions, the recommendation is to raise the state pension age. On contracting out, as has been pointed out, the proposal is to discontinue for DC schemes in 2010, and to phase out for DB schemes by 2030. I hope that the Minister will respond in greater detail to the very valid points raised from the Opposition Benches and explain why he and his colleagues believe that the White Paper in response to the Pensions Commission might prompt a further review of rebate levels.
	We have heard some interesting comments about the White Paper. I suppose one might almost say that in the spring a Minister's thoughts lightly turn to thoughts of a White Paper, but we do not know when exactly. My noble friend has rightly asked whether it is early or late spring. It is now early spring. I challenge the Minister to walk outside the Chamber where he will enter a spring environment. So where is the White Paper? It would be very helpful to have further, more definite information on that.
	It is interesting to note that, even when rebates had become clearly inadequate, Ministers opted not to exercise their powers of reviewing rebates earlier than the standard five-yearly reviews. Under the existing legislation we could have another review next year. It would be helpful if the Minister could give us further information on that. Is there really any justification for not going down that route and for allowing deliberations which will not bite until at least 2010 to influence rebate levels from 2007?

Lord Hunt of Kings Heath: My Lords, I thank noble Lords. I particularly congratulate the noble Baroness, Lady Noakes, and the noble Lord, Lord Oakeshott, on their eight and nine orders debated this afternoon. It is great to see the noble Lord, Lord Hunt, in his place, taking part in this debate.
	As I am discovering in the pensions world, no debate about anything to do with pensions can go without the usual criticism of the Government's pensions policy. I reject what the noble Baroness, Lady Noakes, says. The Government's actions are not an attack on private pensions, as she suggested. We support private pensions. We think their contribution is enormous. One of the main reasons we set up the Pensions Commission was our wish to see stability, consistency and a strong pension policy over the next 30, 40 or 50 years.
	The noble Baroness knows that the £5 billion dividend tax credit that she mentioned is a gross exaggeration.

Baroness Noakes: My Lords, if the Minister wishes to check Hansard he will see that I mentioned no figure, whether it is £5 billion or the slightly smaller figure that the Pensions Policy Institute now suggests. Over a period of 10 years it is ever such a lot of money.

Lord Hunt of Kings Heath: My Lords, we are getting somewhere. This is the second time this week that I have had an acknowledgment from the Bench opposite that it is not £5 billion. I am very glad for that concession. The move was accompanied by reductions in the corporation tax rate. Regarding the other comment she made about financial assistance scheme, she will know that my right honourable friend the Prime Minister has said that we will expedite the review we were going to undertake as part of the next spending round review in relation to the FAS mechanism and payments. We will certainly do that.
	The noble Baroness attacked this Government for being mean-spirited. I refer her to the decision that her government made to apply a cap on age-related percentages for the 1997–98 to 2001–02 review period to curtail public expenditure costs. A degree of consistency on that matter would be extremely welcome.
	I was interested in the quote of the noble Lord, Lord Oakeshott, from the ABI about the complexity of the contracting-out system. It is worth reminding noble Lords of the extract from the Pensions Commission report on that. It said that its preferred option for reform of the state system has implications for the contracting-out rebate. Since it recommends building on the two-tier system, rebates will continue to be paid. But, it says that the contracted-out, contracting-in choice has added complexity to the UK pensions system. It is poorly understood. Its application to personal pensions helped to generate the pension mis-selling problems of the 1990s. It then went on to make the recommendations that noble Lords have referred to.
	In the light of those very strong criticisms and recommendations from the Pensions Commission, I do not think that it is unreasonable for the Government to say that it would be inappropriate to make substantive decisions in relation to the rebate until we have had an opportunity to come to firm conclusions on the Pensions Commission's report. That is the essential rationale for why we have brought this order forward today.
	Noble Lords have asked me to define what is meant by "spring". The noble Lord, Lord Hunt, says that outside it is spring. My daffodils at home in Birmingham are very slow to come out this year. I am not sure that I would describe Birmingham as yet being in blooming spring. I am not prepared to give a definite date to noble Lords. We have said that we want to come to a firm view in the spring period, so it is clear that the Government are very determined to reach a conclusion. Friendly discussions are taking place in government between the relevant departments at this moment.
	On the question of advice, the noble Lord, Lord Hunt, is right about the older age group and contracting back in. Of course, that is a matter for individuals to decide in the light of the advice that they receive. I know that the Association of Independent Financial Advisers has produced a fact sheet setting out the pros and cons of contracting-out through a personal pension. Individuals will be able to obtain information from independent financial advisers that will allow them to make informed choices. We are also liaising with the FSA on customer information that it provides on contracting out. I understand that the FSA is intending to revise the fact sheet towards the end of this year and will then of course take into account the 2007 rebate changes.
	The noble Baroness, Lady Noakes, asked me about the ABI's suggestion about the equity risk premium. I can tell her that the Government Actuary took account of those representations and made adjustments to his assumptions where he deemed that appropriate. Although the ABI may not be satisfied with the outcome, I am satisfied that the matter that it raised was drawn to the attention of the Government Actuary.
	I turn to the points raised by the noble Lord, Lord Hunt. I am grateful to him for giving me notice of those questions. His question about the present fiscal circumstances relates to our duty to ensure that expenditure reflects current economic conditions, not just in setting contracting-out rebate rates but in all areas where public money is concerned. That is a matter of good housekeeping. That must be set alongside the basic premise, which is that the Pensions Commission has set out a complete range of proposals for pension reform in this country. We are earnestly considering them at present. It would not be responsible or in the public interest for us to have made anything other than the decision that we have made, in the light of the discussions that are coming to a point of conclusion, I hope, in the very near future.
	Of course the question of what impact that has on various forms of pension, about which the noble Lord, Lord Hunt, also asked me, was uppermost in our thinking when we considered the various options before deciding on a cost-neutral approach. That in no way signals that we are no longer committed to encouraging private pension provision. Indeed, the very reason for setting up the Pensions Commission was to encourage such provision. The decision to have a cost-neutral approach was not taken lightly. It needs to be borne in mind that it was not an option to leave the rebate legislation as it was. We are legally bound to review the rebate rates from April 2007.
	It is also worth pointing out that the order before your Lordships allows us to increase rebate rates for defined benefit schemes from 5.1 per cent to 5.3 per cent. Although that falls some way short of what the Government Actuary recommended, none the less, it is an increase. For defined contribution schemes, it has always been the case that those contracted out into personal pensions at or above the age at which the cap bites would, other things being equal, be better off contracted in. As I said earlier, I accept that that will depend on personal circumstances and the advice that individuals receive.
	On the question of whether the forthcoming conclusions on the Pensions Commission report require a further review of rebates, if it is decided that any or all of the recommendations in the White Paper are to go forward, they would clearly lead to a significant change in the structure of the state second pension. Consequently, because rebates are intended to provide benefits that broadly reflect the state pension that has been given up, any significant change to the structure of the benefit given would have an impact on those rebate rates. Although the rebates set out in the order can apply for five years to 2012, I can make it clear that they can be changed before the end of that period. It is in recognition of this possibility that my right honourable friend the Secretary of State said that an early review of rebate rates is an option.
	On the point about the Secretary of State not exercising his powers to review rebate rates earlier than the standard five-yearly reviews, this option has been exercised in the past. In 1999, the Government responded to the concerns of parts of the pensions industry by increasing rebates for those with contracted-out personal pensions. There have also been other occasions, necessitated by changes in associated legislation. Given that the procedure involved in reviewing rebate rates needs to take place approximately two years before any change can be made, clearly this option must be exercised fairly early in any five-year period, but again, only if there is clear justification for doing so. At least I hope that I have shown the noble Lord that it is possible in the light of the decisions that we will eventually take. I thank noble Lords for their contributions.

On Question, Motion agreed to.
	House adjourned at twenty-nine minutes before four o'clock.